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MJ^ll^^WJ^^ MA.II. PA.Y 



REPORT 

OF THE 

JOINT COMMITTEE ON POSTAGE ON SECOND-CLASS 

MAIL MATTER AND COMPENSATION FOR 

THE TRANSPORTATION OF MAIL 



AUGUST 31, 1914 



SIXTY-THIRD CONGRESS 

SECOND SESSION 




WASHINGTON 

GOVERNMENT PRINTING OFFICE 

1914 



•4-' 



REPORT 

OF THE * 

^' JOINT COMMITTEE ON POSTAGE ON SECOND-CLASS 
MAIL MATTER AND COMPENSATION FOR 
THE TRANSPORTATION OF MAIL 







AUGUST 31, 1914 


SIXTY-THIRD CONGRESS 

SECOND SESSION 






WASHINGTON 

GOVERNMENT PRINTING OFFICE 

1914 






JOINT COMMITTEE ON POSTAGE ON SECOND-CLASS MAIL MATTER 
AND COMPENSATION FOR THE TRANSPORTATION OF MAIL. 

Congress of the United States. 

JONATHAN BOURNE, Jr., Cftaiman. JAMES T. LLOYD. 

HARRY A. RICHARDSON. WILLIAM E. TUTTLE, Jb. 

JOHN H. BANKHEAD. JOHN W. WEEKS. 

Robert H. Turner, Secretary. 

Richard B. Nixon, Disbursing Officer. 
2 



D. OF S. 
SEP 12 1814 



1 



^ 



TABLE OF CONTENTS. 



Page. 

Letter Transmitting Report to Committee 5-7 

Replies of Members of Committee 7-8 

Introduction 9 

Chapter I. — Explanation of construction and draft of a bill directing the 
Postmaster General to readjust the compensation of steam railroad com- 
panies for the transportation of mail 11-26 

Standardization desirable 13 

Construction of rates 13, 14 

Relation of mail to passenger service 14, 15 

Terminal charges 15-17 

Line rates 17, 18 

Future investigations provided for 18 

Expenditures under committee plan 19, 20 

Side and transfer service 20, 21 

Service compulsory 21 

Fixed, not maximum rates 21 

Committee bill 21-23 

Comments on provisions of bill 23-26 

Chapter II. — Historical review of previous investigations of the subject of 
railway mail pay and resume of testimony and arguments submitted in this 

inquiry 27-58 

Investigations by former commissions 28-30 

The Hubbard Commission (1878) 28 

Elmer-Thompson-Slater Commission (1883) 29, 30 

Wolcott-Loud Commission (1901) 30 

Hitchcock plan (1911).». 30-32 

Expense of postal investigations 32, 33 

Progress of the work of this joint committee 33 

Department plan modified 33-35 

Dead space 35-38 

Allowance for capital charges 39 

Short-line railroads (Talbott bill) 39 

Buckland plan 40 

Briefs 40 

Brief submitted by railroads (June 26, 1913) 40 

Reports of M. O. Lorenz and R. H. Turner 42, 43 

Mr. Lorenz's report 42, 43 

Mr. Turner's report 43 

Post Office Department's brief (Jan. 16, 1914) 43-45 

Executive sessions (Jan. 20 and Feb. 2 and 3, 1914) 45 

Department's third plan — A tentative draft of suggestions for recommen- 
dation for legislation and regulation of railroad mail service and com- 
pensation therefor (Feb. 12, 1914) 45-48 

Hearings reopened 48 

Railroads' reply brief (Feb. 26, 1914) 48, 49 

Railroad companies oppose the Post Office Department's third suggested 

plan (Mar. 16, 1914) 49 

Post Office Department's reply to the railroads (Mar. 24, 1914) 49, 50 

Final hearings 50-55 

(1) Express. 50, 51 

(2) Authorizations of car service 51, 52 

(3) Dead space 52 

(4) Overpay or underpay 53-55 

Car-mileage estimates 55, 56 

Passenger, Pullman, express, and. mail revenue 56-58 

3 



4 TABLE OF CONTENTSv 

Page, 

Chapter III.— The weight basis, its defects — The space basis 59-64 

Present weight rates ; 60 

Present railway post-office-car rates 60 

Comparison of audited revenues and expenditures 61 

Defects of present system 61-63 

Space as a substitute for weight 63 

Advantages of space basis 64 

Chapter IV, — The department's claim that railroads are overpaid for car- 
rying mail — Its four suggested plans 65-84 

Original Hitchcock plan 65-70 

Tentative draft of proposed law for regulation of railway mail pay. . 65-68 

Capital charges disregarded 68 

Discussion of plan invited. 68, 69 

Erroneous treatment of mail space 69, 70 

Department submits a second plan 70-73 

Tentative draft of proposed law for regulation of railway mail pay. . 70-72 

Department submits a third plan 73-77 

A tentative draft of suggestions for recommendation for legislation 

and regulation of railroad mail service and compensation therefor. 73-77 

Fourth departmental plan (H. R. 17042, Union Calendar No. 243) 77-80 

Departmental rates confiscatory 81 

Dictatorial power desired • 81, 82 

The commercial basis 82-84 

Chapter V. — What is a reasonable and just rate rate for transporting mail by 

railroad. 85-89 

Passenger revenues a fair basis for comparison 86, 87 

Mail and passenger car-mile earnings 87, 88 

Desirability of universal rate 88, 89 

Chapter VI. — Comparison of mail and express earnings 90-94 

Comparative earnings on a space basis 91-94 

1. Comparative earnings 91, 92 

2. Comparative earnings on a ton-mile basis 92 

3. Comparison of rates per 100 pounds and per packages of lower 

weight 92-93 

4. Comparison on basis of increase in earnings 94 

Chapter VII. — Comparison of earnings from passenger and mail traffic 95-98 

Mail traffic-passenger traffic compared 95-97 

Baggage-car rates 97, 98 

Chapter VIII. — Comparisons with the Pullman service 99 

Chapter IX. — Analysis of the bill prepared by the joint committee 100-104 

Round-trip authorizations provided for 100, 101 

Relatively higher rate for short hauls 101 

Explanation of rates. 101-104 

Chapter X. — Government ownership of R. P. O. cars 105-110 

Would increase expense 106-109 

Unwise as public policy 109, 110 

Chapter XI. — Inadequacy of departmental data 111-117 

Departmental vacillation 112-114 

Numerous inconsistencies disclosed 114-116 

Better accounting system needed 116, 117 

Chapter XII. — Delegation of discretionary power 117-120 

The divisor order 117, 118 

Blue-tag order 118, 119 

Discontinuance of parcel-post stamps 119 

Autocratic power sought 119-120 

Bureaucracy gone mad 120 

Chapter XIII.— Conclusion 121, 122 

Appendix 123. 124 



LETTER OF TRAIN' SMITTAL. 



Washington, August 1, 1914. 

To the Joint Committee on Postage on Second-class Mail Matter and 
Compensation for tJie Transportation of Mail: 

Gentlemen: On May 28, 1914, our committee adopted the follow- 
ing resolution: 

Resolved, That the chairman be authorized by the joint committee to prepare 
the report of the joint com^mittee. 

The extreme technicality of the subject, the desirability of making 
a presentation clear to the layman and at the same time convincing 
to the statistician and specialist, has made the task a most difficult 
one. If I have seemed slow in complying with your request, it has 
been because of my earnest desire that when our report should be 
presented to Congress it shall contain an analysis of the vast amount 
of data that has been accumulated, and shall present concisely, yet 
comprehensively, the plan we have agreed upon and the facts and 
arguments which led to our conclusions. 

I feel that, under all the circumstances and difficulties that we 
have had to contend with, the work of our committee has been 
remarkably expeditious and that we have well performed the duties 
placed upon us by Congress as far as ''compensation for the trans- 
portation of mail" is concerned. 

The actual work of our committee began in January, 1913, although 
in September preceding, immediately after the creation of our 
joint committee, I personally arranged for the collection of some of 
the information for the use of the committee. Our official investi- 
gation has, therefore, covered a period of nineteen months, which 
doubtless seems long to those unacquainted with our work, and was 

f)erhaps six months longer than the members of the committee be- 
ieved it would take to complete the task. 

Our work has been made much more difficult than I anticipated 
it would be, because of the very remarkable lack of definite and 
reliable statistics in the Post Office Department and in railroad 
offices regarding railway mail pay questions. As you are well aware, 
most of the statistics submitted by the department were in the nature 
of estimates, some of which were changed a number of times. We 
have not, therefore, had the assistance we had a right to expect from 
an administrative branch of the Government presumed to be under 
the charge of specialists. 

Moreover, when this committee began its work it had before it a 
plan proposed by the Post Office Department, and recommended as 
''scientific and businesslike." The department subsequently modi- 
fied its plan in many particulars and then entirely abandoned it, sub- 
stituting a new plan in February of this year. Its third plan was also 



6 EAILWAY MAIL PAY, 

discarded, or greatly modified, in its approval of H. R. 17042, intro- 
duced in the House of Representatives on June 5, 1914, and, if I am 
correctly informed, it has again changed its position by approving 
an increase in the rates contained in said H. R. 17042. While the 
department has appropriated in its plan presented in February, and 
still further absorbed m H. R. 17042 some of the vital bases which 
our committee had worked out, yet, if H. R. 17042 should be enacted 
into law some of the requirements are so pernicious as to destroy the 
benefits which I believe would result from the adoption of our plan. 

The vacillating attitude of the department itself, as well as the 
unreliable departmental and railroad statistics, is largely responsible 
for the unexpected amount of time we have been obliged to devote 
to our study of this subject. On May 14, 1913, this committee con- 
sidered its hearings concluded, but at the request of the Second Assist- 
ant Postmaster General granted the department permission to file a 
brief, which brief the committee expected to receive not later than 
the first of June, 1913. The brief was not filed, however, until more 
than six months later, to-wit, January 21, 1914. 

On March 7, 1913, immediately after the inauguration of the pres- 
ent administration, I addressed a letter to the new Postmaster General, 
Hon. A. S. Burleson, directing his attention to the original and modi- 
fied plans for railway mail pay advocated by his predecessor, and 
asked him to inform this committee whether he indorsed either of 
those plans; and, if so, which. Mr. Burleson replied immediately 
that he would give the subject prompt attention. More than 11 
months elapsed, however, before I received Mr. Burleson's letter of 
February 12, 1914, informing the committee that the department 
had changed its attitude and submitting a tentative draft of a new 
plan. 

The issues presented and the change of attitude of the department 
made it desirable to reopen the hearings, and this the committee did, 
beginning February 26, 1914, and closing April 3, 1914. 

It is generally agreed among students of the subject that this com- 
mittee has gathered the most extensive data ever brought together 
on the subject of railway mail pay, same occupying more than 1,650 
printed pages, as presented in our preliminary report of January 24, 
1913, and our printed hearings, commencing on January 28, 1913, and 
concluded on April 3, 1914, and which as printed from time to time 
were distributed to Members of Congress. 

While I recognized the desirability of an expeditious conclusion 
of our work, I' believed it more important that we should do our 
work thoroughly than that we should conclude it quickly. I should 
regret extremely and be deeply humiliated if our investigation had 
resulted, as did that of the Post Office Department, in our changing 
aur attitude three times and advocating four radically different 
measures. We should certainly forfeit all claim to the confidence of 
Congress if we presented such a record of vacillation as did the de- 
partment. If, in our anxiety to be expeditious, we had repudiated 
three plans we had evolved, upon what theory could we expect Con- 
gress to believe that we would for any considerable length of time, 
continue to advocate any new plan we might recommend? 

I have been working continuously with such assistance as was 
available in the formulation of this report. To segregate the vast 
amount of information, to weigh the value of the various estimates of 



RAILWAY MAIL PAY. 5fe 

the department, to distinguish between the statistics applicable to 
its various suggested plans, and to determine just what weights the 
various estimates and statistics have in relation to the plan this 
committee has worked out, is no small task. 

I present herewith a report I have prepared in compliance with 
the resolution quoted at the beginning of this letter, and if the same 
meets with your approval, will you kindly so indicate, or express 
your dissent from any portions to which you do not subscribe or in 
which you do not wish to participate. 
Yoiirs very truly, 

Jonathan Bourne, Jr., 

CliairTYiaTii, 



EEPLIES.OF M|:MBEIIS QF COMMITTEE. 

Dover, Del., August 19, 19,14^. 
Hon. JoNATisAN Bourne, Jr., 

Washington, D. C. 
My Dear Senator: I am in receipt of your favor of the 15th, also 
page proof of the report on the railway mail pay, which I have care- 
fully read, and particularly chapters eleven and twelve, as requested, 
an of which meets with my hearty approval, and you are duly authp^r 
ized by me to sign my name to the report in full. 

With kind personal regards and best wishes, I remain. 
Very truly, yours, 

H. A. Richardson, 



The chairman of the commission in preparing the report correctly 
states the finding of facts on the subject of railway mail pay, and 
the bill submitted in the report meets the approval of the commission. 
We believe, however, that the chairman is unfortunate in the reflec- 
tion he makes on the Post Office Department and the Postmaster 
General, and from these criticisms we respectfully dissent. 

As the investigation progressed nearly every one connected with it 
changed his views, and no one should be criticised for doing so. The 
country has the benefit of the most exhaustive, thorough, and con- 
clusive investigation that has ever been made on the subject of rail- 
way mail pay, and full credit should be given to all who have con- 
tributed to this result. 

The chairman takes decided stand with reference to the Government 
ownership of various public utilities. That discussion, excepting as 
to the ownership of railway post-office cars, is not within the scope 
of the work of the commission. The ownership of public utilities 
was not investigated by the commission, and it did not make any 
findings in regard to it. We, therefore, disclaim any responsibility 
for the position taken by the chairman on that subject. 

J. H. Bankhead. 
James T. Lloyd. 
W. E. TuTTLE, Jr. 



8 railway mail pay. 

August 21, 1914. 
Hon. Jonathan Bouene, Jr., 

Chairman Joint Committee on Postage on Second-Class 
Mail Matter and Compensation for Transportation of Mail, 

Washington, D. C. 

Dear Mr. Chairman: In signing the report made by the Joint 
Committee on Postage on Second-Class Mail Matter and Compensa- 
tion for the Transportation of Mail, which I have done, I wish to have 
this letter included to indicate that I am not entirely in sympathy 
with some of the strictures of the Post Office Department and ite 
employees w^hich the report contains. This especially applies to para- 
graphs on pages 19, 31, 81, 111, 112, 113, 114, 115, 116, 117, 119, 
and 121. 

It is undoubtedl;^ true that the Post Office Department undertook 
the study of the railway mail pay question just as the railroads did, 
without having at hand suitable information on which to base a 
conclusion, and it has only been through long and scrutinizing hear- 
ings which have been given by the commission that both of these 
elements have reached conclusions which it may be assumed are 
sound. 

I do not think the present employees of the Post Office Depart- 
ment are entirely responsible for this condition, and I am not dis- 
posed to charge lack of good faith against the officers of that depart- 
ment in the reports which they have submitted to Congress at different 
times, as well as those to the commission, although I am confident 
that the department originally and perhaps down to the present time 
has approached this important question in a manner which induced 
attempts to demonstrate the contention that the railroads were 
receiving more pay than was justified by the service which they were 
performing. This is not unnatural, however, because it is the duty 
of the Government's officers to conduct all service at as low a cost as 
possible, but from the standpoint of the impartial observer the tend- 
ency to reduction of pay has been more marked than fairness would 
seem to warrant. It must be remembered that the department has 
been in the position of an advocate of the Government's interests 
while of course the railroads have been in a directly opposite position, 
each hoping that they would gain something by the evidence which 
they, from time to time, submitted to the commission. 
Yours, very truly, 

John W. Weeks. 



II^rTEODUCTION. 



To the Senate and House of Representatives of the United States of 

America in Congress assemhled: 

The Joint Committee on Postage on Second-Class Mail Matter and 
Compensation for the Transportation of Mail herewith respectfully 
submits the following report on compensation to steam railroads for 
the transportation of mail. 

Because of the extreme technicality of this subject and of the general 
impression that the railroads have been greatly overpaid by the Gov- 
ernment for transportation of mail, we deem it advisable to make an 
exhaustive report, in which we may subject ourselves to the criticism 
of repetition. 

We are confident we have worked out a scientific, sound, and rea- 
sonable plan, herewith presented in the shape of a concrete bill, the 
sections of which are so correlated that in our opinion it is absolutely 
necessary for it to be adopted as a whole to secure the benefits re- 
sultant from such legislation. The eUmination of any of its features 
or modification of same will materially affect the benefits that would 
follow the enactment of the bill. 

After submitting our explanation of its construction and reasons 
therefor under Chapter I, we will submit in this report a series of 
chapters dealing with various phases of the subject, as follows: 

Chapter II. A historical review of previous investigations of the 
subject of railway mail pay and a resume of the testimony and argu- 
ments submitted before our joint committee. 

Chapter III. The weight basis and its defects — The space basis. 

Chapter IV. The department's claim that the railroads are over- 
paid for carrying mail. 

Chapter V. What is a reasonable and just rate for transporting mail 
by railroads ? 

Chapter VI. Comparison of mail and express earnings. 

Chapter VII. Comparison of earnings from passenger and mail 
traffic. 

Chapter VIII. Comparison of mail and Pullman earnings. 

Chapter IX. Analysis of the bill prepared by the joint committee. 

Chapter X. Government ownership of R. P. O. cars. 

Chapter XL Inadequacy of departmental data. 

Chapter XII. Delegation of discretionary power. 

Chapter XIII. Conclusion. 

In an appendix to the report is presented an itemized statement of 
aU the expenditures made from the appropriation of $25,000 available 
for the use of this committee. The total expenditures to August 1, 
1914, were $6,560.50, leaving a balance of $18,439.50. 



RAILWAY MAIL PAY. 



CHAPTER I. 



EI^PLANATION OF CONSTRUCTION AND DRAFT OF A BILL DIRECT- 
ING THE POSTMASTER GENERAL TO READJUST THE COMPEN- 
SATION OF STEAM RAILROAD COMPANIES FOR THE TRANS- 
PORTATION OF MAIL. 

At present, compensation for railway mail pay is based partially on 
space and partially on weight, about 90 per cent of the payments 
made to the railroads being determined by weight and the other 10 
per cent by space as represented by the R. P. O. cars. The average 
weight is ascertained by quadrennial weighings, at an annual cost of 
approximately $400,000 to the Government. The country is divided 
into four divisions, weighings being made in each division every four 
years. This nethod is antiquated, unscientific, and unsatisfactory, 
as a quadrennial weighing in a postal di^^ision must be unfair to the 
Gove'nment in cases where the:e is a decrease in the volume of mail 
in the four-year pe iod and unfair to the railroads in case there is an 
inciease. I\o actual data are obtainable as to the actual increase or 
decrease in the weight of mail, though under a weight system the lack 
of this information in the Post Office Department was a great siu^piise 
to your committee. The annual post-office reports show, however, an 
average increase in mail revenue of 7 per cent for the past 10 years; 
hence, undoubtedly, there has been an annual increase in the volume 
of mail during the same period. If the increase in weight has been 
proportional to the increase in revenue, then under the present quad- 
rennial weighing system the railroads of the country have received 
no compensation whatever from the Government for about 14 per cent 
of the mail carj ied by them, during each four-year period. Guesses 
have been m ade by departm.ental and railroad repi esentatives that 
the probable increase in volume of business in weight of mail was about 
4^ per cent per annum. 

Two methods of payment now exist, one for the weight of the 
mail carried and the other for a special service performed by the 
railroads at the request of the Post Office Department in what aie 
known as railway post-office cars. These two methods of payment 
have been bewildering to the people of the country and have led to 
the imxpression that there was a graft in the R. P. O. i^Sij. This 
impiession probably resulted fromi a declaration issued by Post- 
master General Vilas in 1887, which was entirely unfounded, as we 
think we demonstrate on pages 105 to 110 of this report. 

Realizing the weaknesses of our preserrt method of railway mail 
ascertainmients and payments, our committee has endeavored, and 
we think successfully, to evolve a scient'rfic, specific, and simple plan 
and just rates which, if adopted, \sall be clearly understood by the 

11 



12 EAILWAY MAIL PAY. 

American people; will minimize the possibility of any injustice being 
done to either party in interest, the Government or the railroads; 
avoid temptations to either party in interest to deplete or pad the 
mails during weighing periods and tend toward standardization of 
the service and development of desirable economies in administration. 

The substitution of space for weight as the measure of the service 
rendered in railway mail transportation has appealed for many years 
to many students of the subject and has been several times suggested 
though never adopted. 

From the beginning of our study the desirability of substitution of 
space for weight strongly appealed to our committee, and our effort 
has been to work out a plan practical of application and adminis- 
tration. 

Our first effort was to work out a general plan; our second, to work 
out rates under the plan that would give just compensation for the 
services rendered. 

Recognizing the dangers of our present tendency toward a govern- 
ment by rule and regulation instead of a government by law, our com- 
mittee successfully endeavored to construct a bill without any authori- 
zation of departmental power to create rules and regulations, which 
too frequently result in the vetoing of congressional action or the 
emasculation of the purposes intended by Congress in its legislation. 

Early in our study we realized the lack of reliable data and informa- 
tion based upon operation on the part of the Post Office Department, 
the Interstate Commerce Commission, and the railroads themselves, 
and recognized the fact that we would have to make an independent 
study of our own, which presented great diiiiculties because of the 
extreme technicality of the subject. We deemed it wise to secure the 
services and cooperation of the best obtainable statistician in order 
to check the figures and data presented by both the Post Office 
Department and the railroads. We all deem ourselves extremely 
fortunate in our ability to arrange with the Interstate Commerce 
Commission that we might have intermittently, and exclusively for 
a period of three months, the services and cooperation of Mr. M. O. 
Lorenz, associate statistician of said commission, and we desire to 
thank the Interstate Commerce Commission for its courtesy, and to 
express to Mr. Lorenz our appreciation of his assistance and our 
admiration for the ability he has shown, the fairness he has evinced, 
and his breadth of horizon. 

After several months study of our subject Mr. Lorenz made a 
suggestion, the value of which strongly appealed to our whole com- 
mittee, namely, the establishment of two charges for railway mail 
transportation, one a terminal charge and the other a line charge. 
The adoption of these two charges will greatly equalize the present 
inequality in payments between the short-line railroads as com- 
pared with the trunk lines. This same principle was recognized 
m the construction of the parcel-post bill, where the pick-up and 
delivery charge was one charge and the transportation was the other. 
We therefore adopted and strongly recommend to Congress our plan 
of two charges, for the reason that the relative cost of reception 
and delivery of mail at terminals, depots, or stations on lailroads 
is the same, regardless of the distance that the mail may be hauled, 
while the second or line charge varies according to the distance the 
mail is hauled. 



RAILWAY MAIL PAY. 13 

STANDARDIZATION DESIRABLE. 

As business men, we all realized the desirability, if possible, of 
establishing one unit or yardstick and as few subunits as possible. 
So we adopted a 60-foot car, inside measurement, as our standard 
yardstick, and at Mr. Lloyd's suggestion, after many months' con- 
sideration and study, we adopted 30-foot and 15-foot apartment cars 
and pouch mail as our subunits. Adoption of these units will tend 
greatly to standardize both the postal and railroad services, as to-day 
there is an enormous economic waste in mail rail transportation, as 
well as in all transportation, through lack of standardization. 

Under existing law and methods the Post Office Department uses 
an odd number of feet in the apartment-car service. The rail- 
roads receive no extra compensation in the apartment-car service 
where less than 40 linear feet of space (inside measurement) is called 
for. The department may call for as many apartment cars of less 
than 40 feet as it may see fit without any additional expense to the 
Government or compensation to the railroads. This is not sound in 
principle, as there is no incentive for intelligent and scientific stand- 
ardization of the mail service, and is unjust to the other party in 
interest, the railroads. 

Under our suggested plan a mutual benefit will accrue to both 
the Government and the transportation companies, as the present 
odd sizes will be rapidly changed into standards of 60-foot E.. P. O. 
and storage cars, and 30 and 15-foot apartment cars. The Gov- 
ernment will know what standards the railroads have in stock or 
on hand, be able to adapt their mail movements to same, and the 
railroads will know what empty or available space they will have in 
the apartment cars, so that they can more practically assemble their 
business and utilize space not taken by the Government, than is pos- 
sible under existing law and conditions. 

The problem of the pouch service was a knotty one. We finally 
became convinced that taking subunits of 7 linear feet, inside meas- 
urement, and 3 linear feet, inside measurement, in baggage cars, 
would enable the department to economically handle that service. 

The Postmaster General is made the sole authority to determine 
which of these units or subunits the Government would require for 
mail movements, thus protecting absolutely the Government and 
insuring the railroads a cotemporaneous credit as each authoriza- 
tion is made by the Government and furnished by the railroads for 
any service, vitalizing the department in its realization that if it 
called for unnecessary space it would be a debit to the Government 
and a reflection on postal management. 

CONSTRUCTION OF RATES. 

Having decided upon space as the measure of the service ren- 
dered — a 60-linear-foot car, inside measurement, as the yardstick 
upon which to construct our rates, with 30 and 15 linear feet, inside 
measurement, for apartment and storage mail as the subunits, and 
7 and 3 linear feet of space, inside measurement, in baggage cars to 
handle the pouch mail — we entered into the problem of determining 
rates, which under our plan would render a reasonable and just com- 
pensation to the railroads for the performance of each service required 
by the Postmaster General. 



14 RAILWAY MAIL PAY. 

Rate making is in its infancy, as evidenced by the general im- 
pression of students of the subject that cost ascertainments are 
prerequisites for scientific rate making. The Interstate Commerce 
Commission is bending its energies toward the development of an in- 
telligent, universal plan of cost ascertainments and apportionments. 
No satisfactory separation has been made between freight and passen- 
ger operating costs. Nearly all mail is carried on passenger trains. 
Hence, with the lack of reliable data and the resultant necessity for 
the establishment of many arbitraries, in case our committee tried to 
work out specific rates dependent on passenger or other movements, 
the committee, as we progressed in our study, became more and more 
convinced of the necessity of tying our mail rates to and construct- 
ing them on the present average passenger car-mile revenue, which 
may be assumed to be ample and reasonable, as nearly every State has 
a railroad commission, and the passenger rates have stood the tests of 
legislatures, railroad commissions, and courts. 

RELATION OF MAIL TO PASSENGER SERVICE. 

Mr. Bourne advanced the proposition that the main desiderata 
in mail transportation by railroads are frequency, regularity, speed, 
and safety of the service; that the volume of passenger traffic deter- 
niines and primarily controls the frequency, speed, and regularity, 
and, to a great extent, the safety of railroad passenger transportation. 
Hence, everything that is necessary for or tends to increase the 
volume of passenger traffic must be a relatively corresponding benefit 
to the mail in its transportation over the railroads, and, therefore, 
the Government should pay its relative proportion of same. That is 
to say, if the mail were 2 per cent of all passenger business, then the 
mail should bear 2 per cent of any cost incurred in the passenger 
service or expended for increasing the volume of the passenger traffic. 
In fact, Mr. Bourne believed that, if anything, the railroads should 
receive a higher car-mile revenue for mail transportation than for 
passenger service, because, while apparently the railroads make up 
their passenger- train schedules, yet, under postal regulations, the 
mail movements interfere with these schedules, as is shown by section 
1354 of the Postal Laws and Regulations, 1913, reading as follows: 

A mail train must not pull out and leave mails which are in process of being loaded 
on the car or which the conductor or trainman has information are being trucked from 
wagons or some part of the station to the cars. 

Delays of mail trains over roads having frequent train move- 
ments must not only seriously aiTect the public but cause additional 
expense to the railroads because of interruption or suspension of 
other train schedules. Trains may depart leaving delayed passen- 
gers in the depot, but must not depart leaving delayed mail in the 
depot. While realizing that mail movements are more important 
than individual passenger movements, yet, in comparing the two 
services, these requirements or facts should be taken into considera- 
tion. 

We have been surprised that representatives of the railroads have 
not brought out more clearly this fact and presented our committee 
with concrete instances and demonstrations as to the additional 
expense incident to such occurrences. 



RAILWAY MAIL PAY. 15 

The passenger service, as distinguished from freight, includes in 
operating revenues, passenger, mail, express, and milk. According 
to the Interstate Commerce Commission's reports, the average pas- 
senger revenue for the past five years has been 25.3 cents per car- 
mile. The roads have not segregated these car-mile revenues as 
between passenger proper, mail, express, and milk. The car-mile 
revenue from passenger service proper is doubtless over 26 cents. 

Another factor that the committee considered in constructing its 
suggested rates was the ratio of operating expenses to operating 
revenues as found by the Interstate Commerce Commission on all 
the railroads in the United States, and we present the following in 
this connection: 

According to Table 7 of Document No. 105, Sixty-second Con- 
gress, first session, the Post Office Department is authority for the 
deduction that the operating expenses and taxes of the railroads 
amount to sHghtly over 3.08 mills per car -foot mile, or 18.49 cents 
for hauling a 60-foot mail car 1 mile. This excludes the advertis- 
ing and other traffic expenses with which the department claimed 
the mail should not be burdened. 

According to the statistics of railways in the United States for 1911, 
published by the Interstate Commerce Commission, operating ex- 
penses and taxes were 72.53 per cent of the operating revenue. At 
the same ratio, 7 cents should be added to the department's estimate 
of operating expenses and taxes, namely: 18.49 cents for a 60-foot 
mail car mile, making a total of 25.49 cents per 60-foot car mile that 
the railroads should receive for the transportation of mail, on a 60- 
foot car mile basis, to yield them from the mail business the average 
rate of profit now realized on all railroad traffic, both freight and 
passenger combined. 

Thus we had as guides in our rate recommendations 25.49 cents as 
the 60-foot car mile revenue according to the line of reasoning last 
submitted, over 26 cents per car mile as the sole passenger revenue 
for the whole United States, and 25.3 cents per car mile as the average 
revenue from all passenger train traffic, including mail, express, and 
milk, for the last five years. Under all the circumstances we believe 
that a 25-cent 60-foot car mile mail revenue to railroads would cer- 
tainly be fair to the Government, though it might not be as liberal a 
payment to the railroads as the development of subsequent informa- 
tion and more reliable data resulting from the development of a better 
and more universal cost accounting system may demonstrate as 
warranted. 

TERMINAL CHARGES. 

Our next problem was the working out of a terminal charge. The 
principal costs in terminal passenger movements are due to the 
switching and cleaning of cars. In a round-trip passenger move- 
ment there is a minimum of four switches, often more. The train 
is made up by switching in the yard and sending it to the passenger 
station. Upon arrival at its destination it is sent to the yard and 
broken up. Then the cars are reswitched into the make-up of new 
trains, which are sent to the depots or terminals and then make their 
return trips. Upon, arrival at their original starting points they are 
sent to the yard and again broken up. This makes a minimum of 



16 RAILWAY MAIL PAY. 

four passenger-train switch movements, in the cost of which each 
60-foot car should pay its full quota; a 30-foot car one-half; a 15- 
foot car one-quarter; and 7 and 3 feet for pouch mail in baggage 
cars seven-sixtieths or three-sixtieths of such expense, respectively. 

In the mail movements for R. P. O. storage and apartment cars 
there is a minimum of two, although sometimes several more, 
switching movements in addition to the regular four passenger 
movements. This is due to the department's frequently requiring 
railroads to have these cars on the tracks in the depots prior to the 
making up of the passenger trains to permit the loading and fre- 
quently the distribution of mail in these cars at stations. Hence 
the mail should be charged with two extra full-switch movements 
regardless of whether the car is a full 60-foot or a 30 or 15-foot apart- 
ment or storage car, as the railroads in their utilization of their 
30 feet of a 30-foot postal apartment car or their 45 feet of a 15-foot 
postal apartment car have no occasion for and receive no benefit 
from these two extra switchings. 

The Interstate Commerce Commission has frequently approved 
switching charges of $3 or more, although many rates lower than this 
are on file with the commission. After considering these rates, 
noting the difference between freight and passenger switching and 
also making some inquiry into the actual movement of switch 
engines and crews in switching mail cars, we suggest the adoption of 
$1.25 as the basic charge for each switch movement. 

On passenger train round-trip movements there are two cleanings 
of cars; one prior to the start of the train and one at the end of the 
single-trip movement prior to its return. We sought information 
from many roads regarding cost to them of the cleaning. From the 
information received, which differed very materially on different 
routes, we computed an average which gave a result of 3 mills per 
mile run and, taking the department's estimate as to the average 
run of R. P. O., apartment, storage cars, and pouch mail to be 227.8 
miles, we found the average 60-foot car-mile single-trip cleaning cost 
to the railroads, according to their returns, to be 68 cents per car. 
In view of the doubt in our minds as to the absolute reliability of 
this deduction, because of the lack of complete d8ta upon which to 
base same, in constructing our rates we adopted 50 cents for a 60-foot 
car for each single-trip movement, or $1 for a round-trip movement 
as the cost of cleaning a mail car. 

Thus we have for the terminal charge on our standard or yard- 
stick, a 60-foot car, six switching movements at $1.25 each, or $7.50 
for a round trip and $1 for two cleanings for the round trip, or $8.50 
for the round trip terminal charge; for the 30-foot apartment or 
storage car two full mail switching movements and one-half of four 
passenger movements, or the equivalent of a total of four full 
switching charges, making $5 plus 50 cents, this latter being one-half 
of the cleaning cost for a full 60-foot car in a round-trip movement, 
making $5.50 as the round- trip terminal charge for a 30-foot car; 
for a 15-foot apartment or storage car we have two full mail move- 
ment switching charges and one-fourth of the four passenger switch- 
ing charges, making three full switching charges, or $3.75 plus one- 
fourth of the cleaning charge on a 60-foot car, or 25 cents, making a 






KAILWAY MAIL PAY. 



17 



total of $4 for the round-trip terminal charge for a 15-foot apartment 
or storage car. 

For the pouch mail there are no extra switch movements because 
of the mail, hence we would only take four regular passenger switch 
movements at $1.25 each, or $5, plus the round trip two cleaning 
charges aggregating $1, which would give us $6, seven-sixtieths and 
three-sixtieths of which, respectively, would give us 70 cents for the 
round trip terminal charge on a 7 linear foot, inside measurement, 
authorization in the baggage car, and 30 cents for a 3-foot authori- 
zation. But to this should be added an additional charge, for the 
reason that the baggage-master and not the postal employee attends 
to the handling of the pouch mail in transit, he having to fill out 
a form of six columns for each mail pouch, making Rve entries on 
receipt of the pouch and one upon its delivery. Hence, we suggest 
the addition of 30 cents to the 70 cents for the 7-foot round- trip 
authorization and 20 cents to the 30 cents for the 3-foot round-trip 
authorization for the terminal charges in baggage pouch mail, which 
we believe is certainly not an unreasonable credit, but may be too 
low when taking into consideration that if the Government had to 
send a postal employee with this pouch mail it would be required 
to pay the employee probably $3.50 a day for his services instead of 
these 30 or 20 cent allowances made to the railroads for utilization 
of the services of the railroad baggage-masters paid by the railroads 
themselves. 

We therefore present and urgently recommend the adoption, 
believing we have demonstrated their conservatism from the govern- 
mental standpoint, of the following terminal rates : 



Class of service. 



60-foot R. P.O. car 

Storage cars 

30-foot apartment . 
15-foot apartment . 
Closed pouch: 

7 feet 

3 feet 



Terminal charge irrespec- 
tive of distance. 



Round t rip , S ingle trip 



$8.50 
8.50 
5.50 
4.00 

1.00 
.50 



$4.25 
4.25 
2.75 
2.00 

.50 
.25 



LINE RATES. 



Now we come to the line rates. It is far more difficult to demon- 
strate the justice of these rates. We have been obliged, for the lack of 
more reliable information, to take 25 cents per 60-foot car mile as a 
safe or at least conservative estimate, from the governmental stand- 
point, and apply our terminal rates, and then work out line rates which 
would give an average car-mile railway mail revenue nearly equiva- 
lent to 25 cents passenger car-mile revenue. Hence, we take 21 
cents for the 60-foot standard mail R. P. O. or storage car as our 
line rate, though some members of our committee believe this to be 
too low a rate. 

Recognizing the well-known wholesale and retail principle that 
smaller units should yield a relatively higher return than larger ones, 

56211—14 2 



18 



RAILWAY MAIL PAY. 



we have given to the subunits the benefit of fractions in our suggested 
and recommended line rates, which ar^ as follows: 

Line charge 
. per unit 

Class 01 service: mile run. 

60-foot R. P. O. car...: ceuts.. 21 

Storage cars do 21 

30-foot apartment ' do 11 

15-foot apartment do 6 

Closed pouch: 

7 feet do. . . . 3 

3 feet do 1 J 

The adoption of our suggested terminal and line rates will give an 
average 60-foot car-mile mail revenue to the railroads of 24.69 cents 
as will be seen from study of the following table, prepared by Mr. 
Lorenz : 

Joint committee rates on 60-foot car basis. 





Rate per unit. 


Average 
distance 
as tabu- 
lated. 1 


Average rate on 60-foot car basis. 


Unit. 


Terminal 

(round 

trip). 


Line. 


Terminal 
(single 
trip). 


Line. 


Terminal and line combined. 




For 

average 
distance. 


For 100 
miles. 


For 1,000 
miles. 


60-foot R. P. 

60-foot storage 


$8.50 
8.50 
5.50 
4.00 
1.00 
.50 


Cents. 

21.00 

21.00 

11.00 

6.00 

3.00 

1.50 


Miles. 

301.0 

556.0 

185.0 

80.5 

} 34.5 


$4.25 

4.25 

5.50 

8.00 

/ 4.29 

I 5.00 


Cents. 
21.0 
21.0 
22.0 
24.0 
25.7 
30.0 


Cents. 
22.41 
21.76 
24.97 
33.94 
38.13 
44.49 


Cents. 
25.25 
25.25 
27.50 
32.00 
29.99 
35.00 


Cents. 
21.42 
21.42 


30-foot apartment 

15-foot apartment 

7-foot closed pouch 

3-foot closed pouch 


22.55 
24.80 
26.13 
30.50 


All units 










21.82 


24.69 





















1 Average distances (especially in case of 60-foot R. P. O.'s) are too low because tabulation was made by 
R. P. O. routes and not on the operating run of the cars. If the 60-foot R. P. O. average run is 400 miles, 
the 22.41 would be changed to 22.06 cents. 

Adoption of our suggested plan and rates will result in increasing 
the compensation of many of the short-line roads and decreasing the 
compensation of some of the trunk lines. 



FUTURE INVESTIGATION PROVIDED FOR. 

Because of the belief on the part of some of the committee that our 
line rates, especially the base rate of 21 cents for a 60-foot R. P. O. 
car or for a 60-foot storage car is too low, and because of our full 
realization of the meagerness of some of our information and the pos- 
sible unreliability of other information, although we have made every 
effort to check same, we have included in our suggested bill section 7, 
giving both parties in interest, the Governmient,, through the Post 
Office Department, and the railroads, when 25 per cent of the mileage 
of the roads carrying the mail so desire, an opportunity of initiating 
another ascertainment whereby Congress could have presented to it 
by the Interstate Commerce Commission information secured after 
two years' actual operation of our plan. If both the Postmaster 
General, representing the Government, and the representatives of 
over 75 per cent of the railroad mileage carrying the mail believe we 
have been fortunate enough to work out a plan at rates equitable to 



EAILWAY MAIL PAY. 



19 



both parties in interest the people will be saved the expense incident 
to any further investigation of the subject. But if either the Post- 
master General or railroads representing 25 per cent of the total mile- 
age carrying mail believe that an injustice has been done either, an 
avenue for determination is provided under this section, but not 
made operative until after two years actual operation of the law. If 
our plan be enacted into law, we are unanimously of the opinion that 
this would be a necessary period of operation in order to give any 
valuable additional information. 

Although in our study of this problem it has been repeatedly inti- 
mated that the Post Office Department would not approve any plan 
that increased railway mail pay, we have not felt that the fact of 
increasing or decreasing railway mail pay had any bearing whatever 
upon the duty placed upon us by congressional action. Neither have 
we felt that Congress intended to appoint us as messenger boys to con- 
vey to it the wishes, directions, or threatened opposition of the Post 
Office Department. We have felt our sole duty to be to make, with 
the material available, an exhaustive, careful study of this subject 
and present to Congress such data as we were able to collect, such 
ideas as we might be able to evolve, together with a concrete plan 
and rates, with our reasons for our recommendation to Congress for 
their adoption. This we are doing in this report. 

EXPENDITURES UNDER COMMITTEE PLAN. 

Realizing that the American people are entitled to and Congress 
should have all information bearing directly or collaterally on a sub- 
ject of this magnitude and importance, we present the following 
table, prepared by Mr. Lorenz, showing what appropriations would 
probably be required under the adoption of our plan and rates: 

Estimated compensation at rates recommended by joint committee. 



Unit. 



60-foot R. P. O 

30-foot R. P. O 

15-foot R. P. O 

Storage cars 

Closed pouch 7-foot 3 
Closed pouch 3-foot 3 



Number of 
round 
trips .1 



171,915 
448,011 
467,617 
45,573 
596, 495 
1,789,484 



Total $7, 674, 414 



Terminal 
. rate. 



S8.50 
5.50 
4.00 
8.50 
1.00 
.50 



Terminal 
compen- 
sation.! 



$1,461,278 

2, 464, 060 

1, 870, 468 

387, 371 

596, 495 

894, 742 



Line unit 
miles. 2 



103,546,172 

165,418,313 

75,315,925 

50, 662, 145 

41,204,361 

123, 613, 085 



Line 

rate. 



Cents. 
21 
11 

6 
21 

3 

n 



Line com- 
pensation. 



$21, 744, 696 

18,196,014 

4,518,956 

10, 639, 050 

1,236,131 

1,854,196 



i$58, 189, 043 



Less land grant deduction (using 1.925 per cent as in letter of May 4, 1914, from Second Assist- 
ant Postmaster General to Hon. J. T. Lloyd) 



To be paid to railroads exclusive of side and transfer service. 

Estimated by department for side and transfer service 

Estimated by department for freight shipments 



Estimated cost to department (the increased space during the year being taken as offset 
by probable economies) 



Total 
compen- 
sation.! 



823,205,974 

20, 660, 074 

6, 389, 424 

11,026,421 

i 4,581,564 



65,863,457 
1,267,872 



64,595,585 

2,118,820 

714,608 



$67,429,013 



1 The number of trips are as tabulated, but this is known to be too large because tabulation was made on 
basis of R. P. O. routes instead of car runs. Thus a car from Washington to St. Louis and return should 
be charged with only one round trip terminal allowance, but in our tabulation, which was made by divi- 
sions, this was taken as three trips. This would not affect the line charge, but somewhat overstates the 
terminal charges. 

2 All units prorated to a 60-foot car-mile basis aggregate 266,734,284 miles. This is equivalent to a pay- 
ment without land grant deduction of 24.69 cents per car mile and after deduction, to 24.22 cents per car mile. 

3 Closed-pouch service taken as consisting of 25 per cent 7-foot units and 75 per cent 3-foot units, which 
probably overestimates the proportion of the 7-foot units, and hence the total estimate for closed 
pouch is too large. 



20 RAILWAY MAIL PAY. 

It will be noted that the department's estimate for side and trans- 
fer service now performed by the railroads, but under our suggested 
bill to be either performed or paid for by the Government, was 
$2,118,820. The committee does not concur in the soundness of this 
estimate, as in our hearings it developed that the actual out-of-pocket 
expense to the railroads, according to the testimony of representa- 
tives of the Pennsylvania and Missouri Pacific Railroads, based on 
ascertained information, and the application of same to all other roads^ 
would be less than $500,000. Our committee believes that the depart- 
ment would readily be able to make contracts with the railroads to 
continue performing this service provided a reasonable profit were 
allowed them in addition to the out-of-pocket cost. For this reason 
our committee is of the opinion that a million dollars would be a most 
liberal estimate for the expense of the Government in its own per- 
formance or payment for side and transfer service. 

The foregoing table of Mr. Lorenz's estimated compensation under 
rates suggested by our joint committee is based on the department's 
estimate as to the amount of car space it will require for the fiscal 
year 1915 in handling mail. It will doubtless be found, should our 
suggested plan be adopted, that when desirable economies are prac- 
ticed and the department familiarizes itself with its practical opera- 
tion, less space will be required than estimated by the department. 
Should the department's estimate exceed the actual requirements to 
the extent of 3 per cent, that would make a reduction of practically 
$2,000,000 in the amount of actual money that the railroads would 
receive under Mr. Lorenz's estimate. We are confident that the total 
cost to the Government under the adoption and operation of our plan 
would certainly be less than $65,000,000 per annum instead of the 
$67,429,013 computed by Mr. Lorenz on the basis of the department's 
estimates as to the space that will be required and the amount neces- 
sary for the Government to pay for side and transfer service. The 
Post Office appropriation bill, approved March 9, 1914, carries for the 
fiscal year 1915 a total of $62,110,000, made up as follows: 

For inland transportation by railroad routes $56, 188, 000 

For pay of freight or expressage, etc 510, 000 

For railway post office car service 5, 412, 000 

Total $62, 110, 000 

Therefore our suggested plan and rates, if adopted, will not increase 
by more than $3,000,000 the appropriation for railway mail pay in 
the last Post Office bill. 

SIDE AND TRANSFER SERVICE. 

Under our suggested plan, the railroads are rightly relieved of or 
compensated for what is known as ^^side" and 'transfer" service. 
It is no more reasonable or just to compel the railroads to deliver 
mail to a post office after it reaches the depots or terminals than it 
would be for the Interstate Commerce Commission to requhe rail- 
roads to furnish taxicabs free of cost to take passengers to their 
homes on arrival at their destination depots, or motor trucks to move 
freight from the freight terminals to the consignees at the expense 
of the railroads. Hence, we provide in our suggested plan for the 
relief of the railroads from this unjust burden now placed upon them 



RAILWAY MAIL PAY. 21 

and authorize the Postmaster General to make separate contracts 
for this service. 

We recommend the continuance of the present plan of making a 
reduction of 20 per cent in pay to land-grant railroads. The con- 
tention of some of the land-grant roads that they should receive full 
payments does not appeal to us as sound. The roads accepted the 
conditions when they accepted the benefits incident to the land 
grants and, in our opinion, the 20 per cent reduction should continue. 

SERVICE COMPULSORY. 

We include section 9 in our suggested bill, believing that Congress 
has the right to compel the railroads to transport the mail, and that 
the railroads should be required to perform this service provided 
they receive reasonable compensation for the service rendered, as 
the cessation or interruption of mail movements by any refusal on 
the part of railroads to carry mail would work incalculable injiu^y 
to the business and general welfare of the country. 

FIXED, NOT MAXIMUM RATES. 

In our suggested bill we piurposely make oiu- rates fixed, and not 
merely maximum, leaving no discretionary power to the Postmaster 
General to autocratically change the same. We assert that it would 
not only be most unjust, but destructive of confidence in our Gov- 
ernment and unparalleled in rate making for Congress to fix the 
maximum rates and delegate to the Postmaster General the right 
to determine the minimum rates, he as the Government's repre- 
sentative being the shipper in mail transportation. 

We have spent nearly two years in this study, have conscientiously 
and to the best of our ability endeavored to perform the duties placed 
upon us by Congress in its creation of our committee. We feel con- 
fident we have worked out a sound, scientific, and simple plan. We 
believe our suggested rates are certainly not too high from a gov- 
ernmental standpoint though they may be too low from a railroad 
standpoint. They are as near equitable as we can demonstrate by 
means of the data available. We herewith respectfully submit a 
concrete bill, so correlated that it should be adopted in its entirety. 
The elimination of any of its features, or modifications of same, will 
in our opinion materially affect the benefits incident to the adoption of 
the hill as a whole. 

COMMITTEE BILL. 

A BILL Authorizing and directing the Postmaster General to readjust the compensation of steam railroad 

companies for the transportation of mail. 

Section 1. From January first, nineteen hundred and fifteen, or from an earlier date 
if practicable, the Postmaster General is authorized and directed to readjust the com- 
pensation to be paid steam railroad companies for the transportation of mail on passen- 
ger trains, mixed trains, mail trains, or cabooses of freight trains, and for services 
connected therewith at the rates hereinafter named: Provided, That where two or 
more raihoads have varying distances between the same points, the compensation for 
the longer distances may be reduced to that of the shortest distance by mutual agree- 
ment between the Postmaster General and the railroad companies. 

Sec. 2. The Postmaster General may authorize mail service of the following five 
classes, namely: Full railway post-office car service, apartment railway post-oflfice car 
service, storage-car service, closed-pouch service, and side and transfer service. 



22 RAILWAY MAIL PAY. 

Full railway post-oflice cars and storage cars shall be of a standard length of sixty 
feet, inside measurement: Provided, That thirty or fifteen feet of space may be 
authorized for the round trip in baggage cars, at the respective rates hereinafter 
named for thirty or fifteen foot apartment cars. Apartment cars shall be of two 
standard lengths, namely, thirty feet and fifteen feet, inside measurements. Closed- 
pouch mail service shall be the transportation of mail in pouches, bags, or hampers 
in custody of railroad employees on trains on which no full railway poat-oflice cars 
or apartment cars are authorized. Closed-pouch service may be authorized in units 
of three linear feet or seven linear feet, inside measurements: Provided, That not more 
than seven linear feet of space shall be authorized on any one train at the rates here- 
inafter specified for closed-pouch service. Side and transfer service shall be the 
transportation of mail between railroad stations and post offices supplied therefrom 
and between railroad stations. 

Authorizations of railway post-office cars, apartment cars, and storage cars herein 
provided for shall be for the round trip of the car and the maximum space authorized 
in one direction shall be determinative of the space to be paid for in the opposite 
direction, unless otherwise agreed upon between the Postmaster General and the 
railroad company in any particular case: Provided, That authorizations may be. 
changed only at points where the switching of cars into or out of trains would not 
delay the running of such trains: And provided further , That not more than one apart- 
ment car shall be authorized on any one train. Authorizations for mail service 
under this act may be made upon any passenger or mixed train scheduled for public 
use, or upon the caboose of any freight train, and fast-mail trains may be contracted 
for at rates not exceeding those hereinafter named. 

Sec. 3. Service by railway post-office, apartment, and storage cars shall include 
the carriage therein of all mail matter, equipment, and supplies for the mail service: 
Provided, That the Postmaster General is authorized to return to the mail, when 
practicable for the utilization of car spac^ paid for and not needed for the mails, 
postal cards, stamped envelopes, newspaper wrappers, empty mail bags, equipment, 
and other supplies of the postal service. The rates fixed by this act shall also cover 
the transportation of persons who are discharging official duties in connection with 
the Railway Mail Service. Such persons shall include clerks handling mail in cars, 
clerks traveling from their homes to the beginning of a mail run to which they have 
been assigned or to their homes from such mail run, and all other persons while dis- 
charging official duties as inspectors or supervisors of the Railway Mail Service or 
in any other manner assigned to duty in the administration of such service. 

The rates provided for herein shall further cover expenses of delivering within and 
receiving mails at car doors and the switching, lighting, heating, furnishing of 
suitable drinking water, and cleaning of mail cars. Railroad companies carrying 
the mails shall furnish reasonable facilities for caring for and handling them while 
in their custody. They shall furnish all cars or parts of cars used in the transporta- 
tion and distribution of the mails, except as herein otherwise provided, and place 
them in stations before the departure of trains at and for such reasonable time 
as the department may require. They shall also provide reasonable station space 
and rooms for handling and transfer of mails in transit, and for offices and rooms for 
the employees of the Postal Service engaged in such transportation, when required 
by the Postmaster General. 

Sec. 4. Standard specifications shall be prepared by the Postmaster General for the 
construction and fittings of full railway post-office cars, thirty-foot apartment cars, 
fiiteen-foot apartment cars, and storage cars, and the rates herein named shall apply 
only to cars constructed and fitted in accordance with such standards: Provided, That 
whenever a railroad company is unable to furnish standard cars or apartments of the 
length requested, the Postmaster General may accept cars of lesser length if sufficient 
for the needs of the service, and pay only for the actual space furnished, the compensa- 
tion to be a pro rata of that provided for by this act for the standard lengths requested: 
And provided further , That the Postmaster General may accept cars and apartments 
of greater length than those of the standard requested, but no compensation shall 
be allowed for such excess lengths. 

Sec 5. The rates of payment for the services authorized in accordance with this 
act shall be as follows, namely: 

For full railway post-office car service, a terminal charge of $8.50 for each round trip, 
or $4.25 for each single trip, of a sixty-foot car, irrespective of the distance run, and in 
addition thereto a line charge at the rate of 21 cents per mile run. 

For thirty-foot railway post-office apartment-car service, a terminal charge of $5.50 
for each round trip, or $2.75 for each single trip, of a thirty-foot apartment car, irre- 
spective of the distance run, and in addition thereto a line charge at the rate of 11 cents 
per mile run. 



RAILWAY MAIL PAY. 23 

For fifteen-foot railway post-office apartment-car service, a terminal charge of $4 
for each round trip, or $2 for each single trip, of a fifteen-foot apartment car, irrespec- 
tive of distance run, and in addition thereto a line charge at the rate of 6 cents per mile 
run. 

For closed-pouch service, when a three-foot unit is authorized, a terminal charge of 
50 cents for a round trip, or 25 cents for a single trip, irrespective of the distance run, 
and in addition thereto a line charge at the rate of IJ cents per mile for the authorized 
number of miles. When a seven-foot unit is authorized, a terminal charge of $1 for a 
round trip, or 50 cents for a single trip, irrespective of the distance run, and in addition 
thereto a line charge at the rate of 3 cents per mile for the authorized number of miles. 

For storage car service a terminal charge of $8.50 for each lound trip, or $4.25 for 
each single trip, of a sixty-foot car, irrespective of the distance run, and in addition 
thereto a line charge at the rate of 21 cents per mile run. 

Payment for side and transfer service shall not be covered by the rates named 
herein. 

The Postmaster General is authorized to provide, in his discretion, by regulation 
screen or other wagon, automobile, or mail messenger service under existing law, or 
to contract with the railroad company or with other persons for the performance of 
such service at the lowest rates obtainable. 

Sec. 6. Railroad companies whose railroads were constructed in whole or in part 
by a land grant made by Congress on condition that the mail should be transported 
over their roads at such price as Congress should by law direct shall receive only 
eighty per centum of the compensation which would otherwise be authorized by 
this act. 

Sec. 7. After the rates specified in this act shall have been in effect for a period of two 
years, the Interstate Commerce Commission shall, whenever requested by the Postmaster 
General or by the representatives of railroads with an aggregate mileage of at least twenty- 
five per centum of the mileage of railroads carrying mail, make an investigation of 
the justice and reasonableness of rates then in effect, grant hearings to parties in 
interest, and report to Congress at the earliest practicable date thereafter the results 
of such investigation, making specific findings as to whether the rates fixed herein 
should be increased or decreased, and if either, how much. Such report shall show 
for each steam railroad operating company, if practicable, the amount of mail service 
rendered, the cost of performing same, and a comparison of the earnings of such railroad 
company from mail traffic with those from express traffic and other passenger train 
traffic. For the purpose of such investigations the Interstate Commerce Commission 
shall have all powers which it is now authorized to exercise in the investigation of the 
reasonableness of rates, and the Postmaster General shall supply such information 
regarding the mail service as may be requested by the Interstate Commerce Commission. 

Sec, 8. All laws or parts of laws prescribing fines on railroad companies for failing 
or refusing to perform mail service and furnishing facilities therefor when required 
by the Postmaster General are continued in force and made applicable to this act. 

Railroad companies carrying the mails shall submit under oath, when and in such 
forms as may be required by the Postmaster General, evidence as to the performance 
of ser\dce. 

Sec. 9. It shall be unlawful for any raihoad company to refuse to perform mail 
service at the rates of compensation specified in this act when required by the Post- 
master General so to do, and for every such offense it shall be fined not exceeding 
$5,000. Each day of refusal shall constitute a separate offense. 

Sec. 10. All laws or parts of laws in conflict with the provisions of this act are 
hereby repealed. The unexpended balances of the appropriations for inland trans- 
portation by raihoad routes and for railway post-office car service by act of March 
ninth, nineteen hundred and fourteen, making appropriations for the service of the 
Post Office Department for the fiscal year ending June thirtieth, nineteen hundred 
and fifteen, and for other purposes, are hereby made available for the purposes of 
this act. 

COMMENTS ON PROVISIONS OF BILL. 

Section 1. January 1, 1915, is selected as the date of mandatory 
commencement of operation of committee's suggested bill, if enacted 
into law, on the assumption that ample time is thus allowed for the 
Post Ofhce Department to make full arrangements for the adminis- 
tration of the law. At the same time an earlier date is authorized in 
case the department can sooner complete administrative organiza- 
tion. 



24 • RAILWAY MAIL PAY. 

The proviso in this section is suggested in order that the depart- 
ment may be authorized to take advantage, should opportunity pre- 
sent itself, where railroads have different distances between the same 
points and the railroad with the longest mileage -is willing to carry 
mail at the rate payable to the road with the shortest mileage. This 
provision covers the desirable competitive element and at the same 
time avoids any dictatorial power on the part of the department and 
holds inviolate the right and desirability of Congress itself determin- 
ing rates. 

Section 2. This section establishes and defines the classes of mail 
service that the Postmaster General may authorize; makes space 
the measure of the service rendeTed; a 60-foot car, inside measure- 
ment, the yardstick for the determination of the amount of service 
authorized and performed, with 30 and 15 foot subunits, inside meas- 
urement, or, respectively, haK and quarter yardsticks with 3 and 
7 linear feet subunits or divisions of the yardstick applicable 
only to closed-pouch service. 

Side and transfer service are defined; authorizations of railway 
postofhce-cars, apartment cars, and storage cars are made mandatory 
for a round trip, unless otherwise agreed upon by the Postmaster 
General and a raihoad company in any particular case. This pro- 
vision seems just and sound. It is intended to make the department 
more careful in making authorizations, to insure the most economical 
and efficient mail movements, and at the same time give the railroads 
compensation where the cars might come back empty, and yet by 
mutual agreement gives the department and railroad an opportunity 
of permitting the railroad to utilize an empty car on a return trip, espe- 
cially a storage car, for othc/ transportation for which they might 
receive a higher rate than they would from the Government under 
the rates specified in our suggested bill. This makes an incentive 
beneficial to both the department and railroad and minimizes eco- 
nomic waste. 

The suggested law specially provides that authorizations may be 
changed only at points where the switching of cars into or out of 
trains will not delay the running of such trains. 

This is desirable and necessary for the protection of the public so 
that there shall be the least possible interrerence with transportation 
because of the supremacy given under the law to the right of way 
of mail over all other traffic, and our rates, especially the terminal 
rates, are scientifically constructed on the basis of the minimum 
switch movements for mail traffic. 

Section 3. Contains definitions of the service expected to be per- 
formed. The first proviso permits the utilization or such portions of 
authorized space as may intermittently not be needed for the mails 
proper, for transportation of postal cards, stamped envelopes, sup- 
plies and equipment directly connected with the mail. This should 
save the Government considerable money. 

The railroads also are to be compelled to carry, without extra charge, 
railway mail employees during the discharge of their official duties, 
but only those Government employees whose duties are directly per- 
formed in connection with the Railway Mail Service. The railroads 
should no more be expected to carry postal employees free of charge 
when not directly and officially connected with the Railway Mail 






BAIL WAY MAIL PAY. 25 

Service than tlisy should United States Government engineers, 
officers, or employees of any other department in our Government. 

Under this section of the bill the railroads will receive the mail 
at the station door or platform and place it in the car door, or, in the 
case of incoming mail, will receive it at the car door and deliver it to 
the mail wagon at the station platform or station door. Handluig 
the mail in the cars and putting it off the cars will be performed by 
Government employees. Railroads must supply the trucks for han- 
dling the mails at terminals and at stations. Heretofore regulations 
of the depa];tment have required the placing of cars at stations before 
the departure of trains, in order that clerks might distribute the mail 
therein, and they have also been required to furnish room in the 
larger stations for handhng and transfer of mails in transit. This 
section makes this a requirement of law and not a regulation. 

Section 4. The provisions of this section give the railroads definite 
notice of the dimensions of cars or apartments that are likely to be 
required by the Government. They will not be subject to the expense 
of being unexpectedly called upon to furnish odd-sized apartments 
or to change the interior arrangement of cars at unknown intervals. 
Should the railroad company be unable to furnish the space required 
by law, a larger amount of space must be provided, but no additional 
compensation will be allowed therefor. 

Section 5. Establishment of two rates, one a terminal charge 
and the other a line charge, equalizes the compensation as between 
long and short routes. The terminal expense in the case of a 100- 
mile route is practically the same as the terminal expense for a 
500-mile route. The cleaning of the car and the switching expenses 
are the same in one case as in the other. The difference in mail trans- 
portation expense depends upon the difference of the haul; therefore 
we beUeve it desirable to fix a uniform terminal charge regardless of 
distance, and then pay the railroads a mileage rate for the hauhng of 
the mail. The rates prescribed in this section will afford the railroads 
a shghtly less return on the transportation of mail in mail cars than 
they are now receiving for the transportation of passengers in pas- 
senger cars. A more extended discussion of the basis of these rates 
will be found on pages 11-21 and 100-104 of this report. The last 
clause of section 5 relieves the railroads of what is known as side and 
terminal service; that is, the transportation of mail between railway 
stations and between railway station and post office. We see no 
reason why the railroads should be required to transport the mail on 
city streets or country roads. 

Section 6. In 1878 Congress adopted the policy of paying' land- 
grant railroads 80 per cent of the regular weight compensation for 
transporting the mail. They even allowed full compensation for 
railway post office car service. This section limits all mail compen- 
sation of such roads to 80 per cent of regular rates. 

Section 7. This commission has spared no effort in securing the 
most reliable data upon the subject of cost of and reasonable om- 
pensation for transportation of the mail. We recognize, however, 
that some of our information is in the nature of estimates and that 
possibly some of the provisions of our suggested bill if enacted into 
law may not produce the results we anticipate. In order to provide 
against such contingency, we suggest the enactment of section 7, 
which requires the Interstate Commerce Commission, upon request 



2^ RAILWAY MAIL PAY. 



of the Postmaster General or representatives of the railroads with 
an aggregate mileage of at least 25 per cent of the totaSagTof 
railroads carrymg mail, to mvestigate the justice and reasonableness 
of the rates herein established. In the event that both the depart- 
ment and more than three-fourths of the railroads shaVbe content 
with these r^es, they shall remain in force; no investigation will be 
necessary Knowledge on the part of both the department and the 
railroads that an investigation may be called for at the end of two 
years mil undoubtedly make both parties in interest more careful 
m keeping statistical records as to the operation of the l^w 

feection 8. Ihis section we deem essential in order to provide for 
the punishment of raikoads faihng to perform services. The second 
rendered ^^"^ "" '"^ preventing payment for services not 

Section 9. Heretofore the law has not required raiboads to carry 
mail. TheoreticaUy, mail transportation is a matter of contract 
between the Government and each individual road. Practically 
railroads have been compelled to carry the mail, as they could not 
withstand the public criticism which would foUow refusal to do so 
We beheye that the Government should pay a reasonable commercial 
rate for the service it receives, and that when such com.pensation is 
tendered the railroads should be compeUed to perform the service 

bection 10. Ihis section makes existing appropriations under the 
present system of compensation available for use under the space 
basis 11 adopted. ^ 



CHAPTER II. 

HISTORICAL REVIEW OF PREVIOUS INVESTIGATIONS OF THE 
SUBJECT OF RAILWAY MAIL PAY AND RESUME OF TESTIMONY 
AND ARGUMENTS SUBMITTED IN THIS INQUIRY. 

Our joint committee has been acting under the following pro- 
visions of law, namely, the acts of August 24, 1912, March 4, 1913^ 
and March 9, 1914, which read, respectively, as follows: 

Provided, That a joint committee shall be appointed composed of three members 
of the Senate Conmiittee on Post Offices and Post Roads and three members of the 
House Committee on the Post Office and Post Eoads, to be designated by the respec- 
tive chairmen, to make inquiry into the subject of postage on second-class mail matter 
and compensation for the transportation of mail and to report at the earliest prac- 
ticable date, and for this purpose they are authorized by subcommittee or otherwise 
to sit during the sessions or recess of Congress, at such times and places as they may 
deem advisable, to send for persons and papers, to administer oaths, to summon and 
compel the attendance of witnesses, and to employ such clerical, expert, and steno- 
graphic assistance as shall be necessary, and to pay the necessary expenses of such 
inquiry there is hereby appropriated, out of any money in the Treasury not otherwise 
appropriated, the sum of |25,000, to be paid out upon the audit and order of the chair- 
man or acting chairman of said committee. (Act of Aug. 24, 1912.) 

Provided, That the personnel of the membership of the committees and commissions 
created and pro\dded for in sections one and eight of the act entitled "An act making 
appropriations for the ser\T.ce of the Post Office Department for the fiscal year ending 
June thirtieth, nineteen hundred and thirteen, and for other purposes," approved 
August twenty-fourth, nineteen hundred and twelve, shall continue with the same 
authorities, powers, and provisions for expenses until final report is made to Congress, 
which shall be made on or before March fourth, nineteen hundred and fourteen. 
(Act of March 4, 1913.) 

That the personnel of the membership of the committees and commissions created 
and provided for in sections one and eight of the act entitled "An act making appro- 
priations for the serxdce of the Post Office Department for the fiscal year ending June 
thirtieth, nineteen hundred and thirteen, and for other purposes," approved August 
twenty-fourth, nineteen hundred and twelve, shall continue with the same authorities, 
powers, and pro^dsions for expenses until final report is made to Congress, which shall 
be made on or before December first, nineteen hundred and fourteen. (Act of March 
9, 1914.^ 

It is to be Qoted that under the act of August 24, 1912, creating the 
joint committee, we w^ere directed to report at the earliest practicable 
date. Under the act of March 4, 1913, continuiag the personnel of 
the joint committee with the same duties, powers, etc., as conferred 
by the act of August 24, 1912, we were directed to report on or before 
March 4, 1914.. The proviso continuing the personnel of the joint 
committee was enacted in order that Congress might not be deprived 
of the services and the benefit of the study given to the subject by 
Hoa. Jonathan Bourne, jr., and Hon. Harry A. Richardson, the term 
of office of each of these Senators expiring on March 3, 1913, since 
which time both have served without any compensation, paying their 
own expenses. As the joint committee had not completed its work 
on March 4, 1914, the personnel of the committee was on March 9, 
1914, again continued, with the same duties, powers, etc., as conferred 
by the act of August 24, 1912, and directed to make its report on or 
before December 1, 1914. 

The progress made by the joint committee in the interims referred 
to will be stated more at length hereafter. 

27 



^^ RAILWAY MAIL PAY. 

Investigations by Former Commissions. 

Before entering into detail as to the work of the joint commitfeP p 
wl7^'7 ^f investigations had by former commissions iXoX sub 
ject of railway mail pay may be enlightening. ''^" 

The Hubbard Commission (1878). 

SPACE, COST, AND SPEED. 

Under the act of July 12, 1876, the President appointed a commit 

BioTrLZd'Z'Tu'Z ■''''^'^''f .'r y^^""^' *^« Hubbard Commis- 
Mou reacnea the conclusion that the proper basis for dptprmininn. 

what compensation should be paid the railroads was space and Zf 
theZt'"" '''' ^^"™^'^ ^^°^'^ ^^ P-'i *1^*^ coirarrfa'S'prS 
Two reports were made, a majority and minority renort tha 
opinion being expressed in the former that loTer cent should be 
subtracted from the total operating expenses for passenger tra^n 

heX f "} r'°"''' "l station ^and other expenses norappSe^ 
the Postal Service and that 54,1 per cent be added to provide a return 
equal to that received by the railroads from the generalpublic The 
minority report, after taking the operating expenses of the railrolds 
for passenger-tram service and deducting 13 per cent therefrrai for 
s ation and other expenses in which it waf bdieved the Postel Se^v ce 

Se^ oTtatstSif '' P^^ -"^^ '^ --^ ^^' «^-^e™ 

40 miles per hour, respectively, while those recommended i^ the 
minority report would have yielded 5.82 miUs to 7.I?S for Seed! 
of 23 and 35 miles per hour, respectively. ^ 

Ihe minority report also differed from the majority report in that 
It recommended authorizing the Postmaster General to ascertafn 
every four years or oftener, the average cost of running a passenger 
tram measured by a mear foot and whtt percentage shouldCadled 
thereto to give a fair profit to the railroads. tL maioritv renort 
made no recommendation in this respect majority report 

Both reports contemplated a law authorizing the Postmaster 

between the railroads and the Post Office Department! such dX- 



railway mail pay. 29- 

Elmer-Thompson-Slater Commission (1883). 
space-weight and speed. 

Under the act of March 3, 1883, the Postmaster General appointed 
a commission commonly known as the Elmer-Thompson-Slater Com- 
mission. Under date of December 3; 1883, that commission made 
its report, which Postmaster General Gresham transmitted to Con- 
gress on December 20 of the same year (H. R. Ex. Doc. No. 35, 48th 
Cong. 1st sess.). This report recommended a system based on space, 
weight, and speed. 

This was a departmental commission, consisting of the Second 
Assistant Postmaster General, the general superintendent of Railway 
Mail Service, and the superintendent of the Division of Railway 
Adjustments. 

They recommended that the basis of pay should be the car space 
used, determined by taking a linear foot of car per mile run as the 
unit and the frequency and speed with which the mails were con- 
veyed; that the space factor should be determined by the Postmaster 
General, modified by weight and frequency of the mails; the speed 
factor to be determined by the schedules of the various railroads in 
connection with the official reports of the Railway Mail Service. 

It was recommended that the Postmaster General be authorized 
to increase or reduce the amount of space to be paid for, as the case 
might be, after a weighing had to determine whether there had been 
a sufficient increase or diminution in the amount of mail transported 
on any railroad to warrant an increase or diminution in pay. 

For closed-pouch service they recommended a rate of 5 mills per 
linear foot per m^ile run for 6 linear inches of space, the equivalent of 
200 pounds of mail or less, but not less than $35 per mile per annum 
upon any route on which six-round trips per week were made. For 
railway post-office cars at speeds ranging from 20 miles or less per 
hour to 30 miles per hour rates of 5 mills and 5.5 mills, respectively, 
were suggested, and for each additional mile in excess of 30 miles 
one-tenth of a mill additional. In the adjustment of space in rail- 
way post offices they recommended allowances ranging from 13 feet 
for 500 pounds, daily averege, to 60 feet for 8,000 pounds. 

The commission found that the average earning from passenger- 
train service was 26 cents per car mile. They concluded, therefore, 
that if the railroads received 5 mills per linear car foot per mile run, 
or at the rate of 25 cents for a 50-foot car at the ordinary speed of 20 
miles per hour, they would be getting a rate corresponding closely 
to the returns from all passenger traffic combined and one that was 
just and reasonable. They also recommended that side service 
should be separated from railway transportation. 

The commission also had in mind placing some restrictive gauge 
upon the exercise of discretionary and arbitrary power by officers 
of the Post Office Department in making allowances for space. It 
was thought that the gauge prescribed by the committee, namely, 
weight of the mails modified by the room necessary in which to assort 
and distribute the same and the speed with which they were con- 
veyed, would remove all possibility of improper or arbitrary allow- 
ances in determining the space and pay on any particular railroad. 



30 



RAILWAY MAIL PAY. 



To summarize, the commission was for a space measure restricted 
and regulated by the weight carried, with a rate ba?ed il^on the av^^^^^ 

:roveTheZre?y''^ "'""^^ '^''^' ^^"^ ^ ^^^^- -^^ f- ^P-d^ 
WoLcoTT-LouD Commission (1901). 

Under the act of June 13, 1898, a congressional Postal Service Com- 
mission was created, commonly known as the Wolcott-Loud Commis- 
sion ihis commission reported on January 1, 1901, reaching the 
conclusion that the prices paid to the railroad companies for the 
transportation of the mail were not excessive (S. Doc. No. 89 pt 1 
p. 19, 56th Cong., 2d sess.); and further, that the prices pkid * as 
compensation for the postal-car service were not excessive With 
reference to space it says (p. 15 of the same report): 
^J^!t^. commission, while recognizing that the question of ''space " must be considered 
vfnw. ^ •i'*''^''? influence upon the question of the reasonableness of thHresent 
railway mad pay, feels unwilhng to recommend it as the controlling stenSrdbv which 
the rates of cornpensation for the transportation of the mails shall be Sed because 
of the impossibdity, with the evidence befo-^e the commission, of applyinTthe ' We " 
basis of payment to the carriage of the mails. ^PPiying ^ne space 

As to this, Mr. Loud, in a separate report, says: 

fh!^f!^^ \^l ^P^^T' ^^"""^^"^ ^® *^® ^^«i« of P^r, and I reach this conclusion from 
the fact, which must be apparent to everyone who has made a careful stJidV of th^ 

flCT22T '^""" '" ''"" '^'""^'' and'^herefore shouM be thTconiolli^l factor' 
Again, on page 24 of the same report, he says: 

^5^^''^i?'/'''\®''?'^'^,''n*n*^'*^^o^y before the commission, in my opinion to recom- 

rStT^om tfe^'ctThi^tL^"^/"' '.^'^^^ '^''''' ^^* '^' '^'^ o? such' test?rSry 
results trom the fact that the system of space payment was regarded eenerallv bv fbp 

puZe™ '' ^-Pr-^ticable, and a prosper i^/estigation inThat dSc^LVwal n^^^ 

Hitchcock Plan (1911). 

This now leads to a consideration of H. K. Document No 105 
bixty-second CongTess, first session, ^A report giving the results of 
the inquiry as to the operation, receipts, and expenditures of railroad 
companies transporting the mails, and recommending legislation on 
the subject, and submitted to Congress by Postmaster General 
Hitchcock on August 12, 1911. 

The authority under which this inquiry was conducted by the 
I'ost Ofhce Department was the act of March 3, 1879, which reads 
as follows: ' -lcg,uo 

The Postmaster General shall request all railroad companies transporting the mails 
to furnish, under seal, such data relating to the operating, receipts, and expenditS-es 
of such roads as may, m his judgment, be deemed necessary to enable him to ascS 
the cost of mail transportation and the proper compensation to be paid7or the slme 
on the'iSi'.^-^'' ^^r^^r^''} ^^ P«^^^^««' «^^ke such recommeMatil fouXd 
eqitbie '''''' ^^'' '''*''^' ^' '^^^^' ^^ ^'' ^P^^^^' be just and 

Although this law had been on the statute books for 28 years no 
delinite action was taken thereunder until 1907, during the admin- 
istration of Mr Cortelyou when Second Assistant^ Postmaster 
(general bhallenberger was directed to pursue the inquiry contem- 
plated by the statute. The inquiry was continued by Mr. Meyer, 



RAILWAY MAIL PAY. 31 

who succeeded Mr. Cortel^^ou as Postmaster General, and was pur- 
sued to completion under the administration of Mr. Hitchcock. 
(Hearings, pp. 3, 4, and 5.) 

The plan in brief proposed the substitution of space for weight as 
the main factor to be used in the determination of the compensation 
to be paid the railroads for carrying the mail. To measure the space 
used and to determine the cost incurred by the raihoads in the per- 
formance of mail service, it adopted as the yardstick or measure for 
these respective determinations a linear car-foot mile. A separation 
was made of the operating expenses and taxes of the freight and pas- 
senger train service, respectively. For determining the operating 
expenses and taxes applicable only to passenger service proper as 
distinct from mail and express services, the number of car-foot miles 
made in each service was ascertained. The percentage of the mail 
car-foot miles to the total passenger-train car-foot miles was then 
used to apportion to the mail service its share of the operating 
expenses and taxes assigned to passenger, mail, express, and other 
passenger-train ser^dces after certain expenses, such as traffic and 
advertising expenses, had been entirely eliminated, on the ground 
that the mail should not share in such expenses at all. The percent- 
age of mail car-foot miles was 7.C9 (Hearings, p. 1008), while the per- 
centage of passenger-train operating expenses and taxes assigned to 
mail service was 6.68 (Hearings, p. 996). It was then proposed, in 
addition to reimbursing the railroads for the cost incurred and taxes 
paid on account of mail service, to pay them a 6 per cent return on 
such cost, including taxes. 

In his letter of August 12, 1911, transmitting said document to 
Congress, Postmaster General Hitchcock stated that by the adop- 
tion of this plan a saving of $9,000,000 to the Government could be 
effected. The plan contemplated no return on capitalization, the 
compensation to be received by the railroads being restricted to 
actual operating cost, including taxes, and a 6 per cent return thereon. 
It did not relieve the railroads from performance of side and terminal 
service, and made mandatory upon them the carrying of all employees 
and officers of the Post Office Department free when traveling on 
official business. As already indicated, both the majority and mi- 
nority reports of the Hubbard Commission recommended a return 
to cover fixed charges and interest on the investment. Both re- 
ports recommended that the railroads be relieved from side and 
terminal service. The EJmer-Thompson-Slater Commission recom- 
mended a return closely corresponding to the return from all pas- 
senger train traffic. The Wolcott-Loud Commission also viewed 
railway-mail pay as a commercial proposition. 

Document 105 was largely responsible, as indicated in the chair- 
man's preliminary report, for the creation of the present joint con- 
gressional committee. A bill of the same purport as contained in 
Document 105 was presented to the Senate Committee on Post Offices 
and Post Roads when it had under consideration the Post Office 
appropriation bill for the fiscal year ending June 30, 1913. Its pro- 
visions were strongly recommended by Postmaster General Hitch- 
cock, through his second assistant, Hon. Joseph Stewart. The 
recommended bill was incorporated in one of the committee prints 
of the Post Office appropriation bill, but owing to the fact that the bill 
was already burdened with new legislation, it was thought wise by the 



32 



RAILWAY MAIL PAY. 



committee to postpone consideration until some future time Hon 
Jonathan Bourne, jr, then chairman of the Senate Post Offices and 
rost Koads Committee, was authorized to introduce the bill in the 
Senate which he did on July 26, 1913. The bill was numbered 
Post Road^ referred to the Senate Committee on Post Offices and 

The compilation and tabulation of the information contained in the 
Hitchcock plan enunciated in House Document No. 105, Sixty-second 
Congress, hrst session, cost the Government approximately $19 500 
two specific appropriations of 110,000 each having been made by 
Congress for that purpose. The railroads claim that in round num- 
bers it cost them a quarter million of dollars to secure the information 
sougnt by the department. 

.ttin nnn ^^^?:^^i,^i_^^^^^^^^^ ^^ ^^^ investigation expended $16,000, 
1)10,000 ot which being a specific appropriation and $6,000 payable 
out or the postal revenue. 

To cover the expenses of the Elmer-Thompson-Slater Commission 
the sum ot $10,000 was appropriated, payable out of the appropri- 
ation tor inland transportation by railroad routes '' 
«;to7 nnn^^ investigation made by the Wolcott-Loud Commission 
fo^o^o .T^ appropriated to cover the expenses thereof, of which 
l>zl,8o2.14 was expended. 

EXPENSE OF POSTAL INVESTIGATIONS. 

Below is given a statement, taken from a letter of Hon. Charles A 
Kram, Auditor for the Post Office Department, dated February 21* 
1914, and addressed to Hon. Jonathan Bourne, jr. showing the 
amount appropriated, expenditures, and the balance carried to sur- 
plus tund, tor the commissions above named, together with that of 
,r^ other commissions appointed to investigate postal subjects 
other than that of railway-mail pay: 



Commission on railroad transportation of mails (Hubbard 
Commission): 
Act July 12, 1876 (19 Stat., 79) . . . 

1877 

Act Mar. 3, 1877 (19 Stat., 385), payable from postal" reve- 
nues 

D^artmental investigation orRaHway Mail Service' (Elmer- 
Thompson-Slater Commission): 

Act Mar. 3, 1883 (22 Stat., 455) 

(This sum was payable out of the approprYaVion""' in- 
land mail transportation, railroad routes," and no sep- 
arate account appears to have been kept of the expendi- 
tures for this commission.) 
Postal Service commission (Wolcott-Loud): 
Act June 13, 1898 (30 Stat., 445). 

Act Mar. 1, 1899 (30 Stat., 966) ... 

1900 

1901 

1 903 .".'.".'.'.".' 

Joint commission on second-class mail matter 

Act June 26, 1906 (34 Stat., 477) . 

1907 

1913 '..'.'.'.'.'.'. 

Jomt commission on business methods of Post Office depart-' 
ment and Postal Service: 
Act Mar. 2, 1907 (34 Stat., 1217) 

1908 

Act May 27, 1906 (35 Stat., 417) . 

1909 

1913 



Appropria- 
tions. 



Expendi- 
tures. 



Balance car- 
ried to sur- 
plus fund. 



SIO, 000. 00 
6, 000. 00 

10, 000. 00 



20, 000. 00 
7, 000. 00 



$10,000.00 



25, 000. 00 



75,000.00 

'io,m'.oo' 



10, 000. 00 
8, 658. 93 
3,193.21 



5, 147. 86 



10,534.16 



15, 000. 00 
59,661.01 



3,545.98 



14,465.84 



6,793.01 



RAILWAY MAIL PAY. 



3a 



Commission to investigate cost of handling second-class mail 
(Hughes Commission): 

Joint resolution Mar. 2, 1911 (36 Stat., 1458) 

1912 

1913 

Joint committee on postage on second-class maU matter and 
compensatioa for the transportation of mail:i 

Act of Aug. 24, 1912 

Act of Mar. 4, 1913 

Act of Mar. 9, 1914 ' 

(Personnel and powers of joint committee continued by 
two last-named acts.) 
Acts of July 31, 1914 



Appropria- 
tions. 



$25,000.00 



25,000.00 



Expendi- 
tures. 



$18,565.95 



6, 560. 50 



Balance car- 
ried to sur- 
plus fund. 



$6,434.06 



1 The expenses of this joint committee were not taken from the statement given by Mr. Kram, but from 
the records of the joint committee. 

Progress of the Work of this Joint Committee. 

On August 26, 1912, two days after the passage of the act creating 
the present committee. Congress adjourned sine die, and immediately 
almost aU the Members of Congress departed for their homes. Owing 
to the press of legislative business of the last two days of the session, 
there was not time for organization of the joint committee and the 
formulation of a plan of procedure. 

The organization was delayed after the convening of Congress in 
December by the absence of several Members. On. January 6, 1913, 
the committee was finally organized, but no time had been lost by the 
delay in its organization. Hon. Jonathan Bourne, jr., then chairman 
of the Senate Committee on Post Offices and Post Roads, had, on 
September 11, 1912, sent a copy of S. 7371 to the executive officers 
of aU the railroads carrying the mails, 795 in number, the purpose 
being to save time and secure an expression of opinion on the plan 
recommended by the Post Office Department as embodied in the bill 
introduced and known as Senate biU 7371 so that the joint committee 
might have before it the briefs of both parties in interest. 

The replies to the chairman's circular letter submitting the bill to 
the railroads clearly indicated that they were united in opposition 
to its provisions. During the Christmas holidays the chairman 
arranged for a conference, at which the following gentlemen were 
present: The Hon. Joseph Stewart, Second Assistant Postmaster 
General; Mr. Ralph Peters, chairman of a committee on railway 
mail pay, representing the railroads; Mr. W. A. Worthington, 
assistant director of maintenance and operation, Union Pacific and 
Southern Pacific systems; and Mr. V. J. Bradley, general supervisor 
of mail traffic, Pennsylvania Railroad Co. 

DEPARTMENT PLAN MODIFIED. 

This conference developed that the main objections of the rail- 
roads to the department's bill, aside from their general objection to 
the space basis, were that the Postmaster General was authorized 
to make the primary separation between passenger and freight 
services; that it made no provision for crediting the railroad com- 
panies with a reasonable return on the capital employed in the Rail- 
way Mail Service; and that in the matter of car space it did not 

56211—14 3 



34 RAILWAY MAIL PAY. 

•■ 

credit the railroads with the maximum space in both directions. 
The Postmaster General stated through his Second Assistant Post- 
master General, the Hon. Joseph Stewart, and directly by telephone, 
that he was willing to make tne concessions to the railroads in the 
respects indicated. 

Shortly after the informal conference referred to, namely, Janu- 
ary 6, 1913, the committee organized, and the chairman, after calling 
the committee's attention to the foregoing modificatioi^s in the 
departmental plan, was authorized to formulate a letter to Post- 
master General Hitchcock, asking him to indicate in writing his 
recommendations, with his reasons therefor. 
■This letter was as follows: 

January 6, 1913. 
Hon, Frank H. Hitchcock, 

Postmaster General, Washington, D. C. 

My Dear General: Referring to telephonic conversation had vvith you several 
days ago, in which you stated that the department was willing to make certain con- 
cessions to the railroad companies in the matter oi railway m.ail pay by modifying 
the position taken by it in House Document No. 105 and as expressed in the pending 
,bill, S. 7371. 

As I understand it, while approving in general the plan outlined in House Docu- 
ment No. 105, you are now prepared to recommend certain modifications of that plan 
in these particulars, to wit: 

First. That the Interstate Commerce Commission instead of the Postmaster Gen- 
eral be authorized to make the primary separation between passenger and freight 
business. 

Second. That in the matter of car space the railroad companies be credited with 
the maximum space in both directions. 

Third. That in addition to a compensation of 6 per cent of the operating expenses 
the railroad companies, after an apportionment, be credited with a reasonable per- 
centage of the capital employed in and relating to the Railway Mail Service. 

The joint committee organized this morning and is anxious to have you indicate 
in writing, at the earliest possible date, your recommendations modifying the plan 
as outlined in House Document No, 105, with your reasons therefor. 

As prompt a response as the nature of this request will permit is desired. 
Yours, very truly, 

Jonathan Bourne, Jr., 
Chairman Joint Committee on Postage on Second-class Mail 

Matter and Compensation for the Transportation of Mail, 

In reply the Postmaster General sent the following telegram: 

Washington, D. C, January 8, 1913. 
Hon. Jonathan Bourne, Jr., 

United States Senate, Washington, D. C: 

• Your letter of to-day is accurate in its statement of the modifications I favor. 

Frank H. Hitchcock. 

His formal reply to the chairman's letter of January 6 reads as 
follows : 

Post Office Department, 
Office of the Postmaster General, 

Washington, D. C, January 9, 1913, 
Hon. Jonathan Bourne, Jr., 

Chairman Joint Committee on Postage on Second-Class Mail Matter 

and Compensation for the Transportation of Mail. 

My Dear Mr. Chairman: Referring to your letter of the 6th instant regarding 
certain proposed modifications of the general plan outlined in House Document 
No. 105 for readjusting railroad mail pay, I have the honor to state that I am w'illing 
to recommend the following in connection therewith: 

First. That the Interstate Commerce Commission, instead of the Postmaster Gen- 
eral, be authorized to make the separation of operating expenses between passenger 
and freight services. 



RAILWAY MAIL PAY. 35 

Second. That in computing the car-foot miles the mail service shall be charged in 
both directions for a line of railway post-office cars with the maximum space author- 
ized in either direction. 

Third. That, in addition to the operating expenses and taxes apportionable to the 
mail service and 6 per cent thereof, companies may be allowed such additional amounts, 
if any be necessary, as shall render the whole a proper proportion of a fair and rea- 
sonable return on the value of the property necessarily employed in connection 
with the mail service. 

Such modifications of the phraseology of the proposed law as may be necessary 
to effect these changes will be prepared as early as practicable. 
Yoursi very truly, 

Frank H. Hitchcock, 

Postmaster General. 

"dead space." 

Later it developed that the modification relating to car-foot miles 
was no modification at all, the Post Ofiice Department claiming that 
under the rules set forth in Document No. 105, it had alrcad-y given 
full credit to the railroads in its space figures contained in that docu- 
ment, so far as a line of full railway post-office cars were concerned, 
for the maximum space authorized in either direction. 

This was brought out early in the hearings by Mr. V. J. Bradley, 
supervisor of mail traffic, Pennsylvania Railroad Co. (Hearings, pp. 
435 and 436) in response to a question of the chairman as to what 
effect the concession made in Postmaster General Hitchcock's letter 
of January 9, 1913, with reference to car-miles would have on the 
disallowance by the Post Office Department of 26,155,391 car-miles 
reported by his company. His answer was as follows: 

That is simply a restatement by the former Postmaster General of the practice which 
the Post Office Department claimed to have pursued in preparing Document No. 105 
in regard to recognition of space in full railway post-office cars. It is therefore not 
regarded as a modification. 

Then the following colloquy occurred between the chairman and 
Mr. Bradley (Hearings, pp. 436-437): 

The Chairman. Read my letter to the Postmaster General, on page 96, dated 
January 6, 1913, and kindly inform me if acquiescence of the department or by law 
in the terms of such letter would, if in effect, have wiped out this difference of twenty- 
eix-odd millions?. 

Mr. Bradley. If the Post Office Department had given a plain affirmation to your 
second paragraph, reading, "In the matter of car space the railroad companies be 
credited with the maximum space in both directions," I would say that would have 
entirely settled the question at issue as regards dead mail space. 

The Chairman. I have a telegram from the then Postmaster General, Mr. Hitch- 
cock, referring to my letter of January 6, 1913, reading as follows: "Your letter of 
to-day is accurate in its statement of the modifications I favor." That telegram, you 
take it, is contradictory, taken in conjunction with my letter and the letter of Mr. 
Hitchcock of January 9, which you have read. 

Mr. Bradley. It seems to me that the letter of the former Postmaster General par- 
ticularly limits the modification he is willing to make to the full railway post-office 
car, regarding which, in the case of the Pennsylvania Railroad Co., we had a difference 
with the Post Office Department of only 6} per cent, and that it does not propose or 
consent to any modification in regard to the other classes of mail-car space, storage 
cars, apartment cars, and closed-pouch space, which together represent 21,000,000 
car-foot miles out of 26,000,000 disallowed. Therefore, the modification, as I under- 
stand it, is only a very slight approach toward an adjustment of the differences. 

The Chairman. But all this difference of twenty-six odd million car-foot miles 
would be dissipated by the allowance of car space by crediting the railroad company 
with maximum space in both directions in the matter of car space. 

Mr. Bradley. Yes; and that would be, as I say, a simple recognition of the space 
that was actually and necessarily operated for the mails during the month selected for 
the test— November, 1909. 



36 RAILWAY MAIL PAY. 

The Chairman. Such an allowance, by law or by the department, namely, crediting 
railroad companies with maximum space in both directions for all car space used, 
would rectify the discrepancy between yourself and the department as represented 
by the nonallowance for 13,546,378 car-foot miles on empty storage cars running, 
would it not? 

Mr. Bradley. I believe so. 

The Chairman. So that really the main difference between you and the department 
in the results obtained on the information contained in Document 105 is the difference 
in allowance or nonallowance for maximum amount of space for the round trip? 

Mr. Bradley. So far as the space is concerned; yes, sir. 

As to this, Second Assistant Postmaster General Stewart (Hear- 
ings, pp. 1014-15) makes the following statement: 

The cases covered by Postmaster General Hitchcock's letter are not such cases as 
are involved in the difference between the results reached by the railroads' committee 
and the officers of the Post Office Department. * * * 

This referred to cases where, because of a difference in the authorization of railway 
post-oflEice cars in the two directions, a doubt had arisen as to whether under the new 
plan proposed the raihoad companies would receive credit in both directions for the 
maximum space authorized in either direction. Its purpose was to remove all doubt 
upon this point and to agree that the rule should be written in the statute in order 
that it could not be questioned. It was not an admission that the allowances made 
in Document 105 had been erroneous in such cases. 

The claim of the railroads was that the Post Office Department, 
in compiling its space figures contained in Document No. 105, provided 
for only the minimum necessities of the postal service, refusing — 

to credit the mail service with much of the space thus required by the department, al- 
though his figures for the other passenger- train services allowed fully for all such space 
required by them. In fact, in many cases such space actually required by the mails, 
and so reported by the railways, was taken from the total mail space, and, without 
reason, assigned to the passenger service. 
(Preliminary report, p. 13.) 

The Post Ofiice Department just as positively asserts "iheit the 
railroads companies gener illy reported the space at the maximum 
of operating conditions, whether warranted by the needs of the 
mail service or not." (Hearings p. 1017.) 

What the Post Office Department did is described from the railroads' 
viewpoint by Mr. Bradley (Hearings, pp. 405-406) as follows: 

The car space devoted to the mails, which the Post Office Department had refused 
to recognize or accept, had been deliberately transferred to the car space credited to 
the passenger service, thus changing the relative ratios of one to the other. The 
explanation of the Postmaster General was based upon a discrimination between car 
space directly used by the mails, and deemed absolutely necessary, and car space 
incidentally required in connection with the mails, the latter being denominated 
"dead space, " and thus transferred to the passenger service. The fact is, that it is 
not dead space, but just as active as any other car space in the trains, and is just as 
much an attendant feature of the mail service as similar unoccupied space in the 
passenger or express cars is to those services, and which the railroad companies, of 
course, charge to either of those services. 

What the Post Office Department did, from its viewpoint, may be 
gathered from the definition of '^dead" and ^^ deadhead" space given 
by Second Assistant Postmaster General Stewart (Hearings, p. 1380), 
which was as follows : 

Speaking generally, and I will say that the record is more specific, dead space as 
it appears in Document 105, and as the subject of discussion here, is that space in 
cars reported by the railroad companies and charged to the mail service which the 
department determined was operated for the convenience of the railroad company 
without a necessary connection with the mail service, or space operated in excess 
of the "authorization made by the department and operated for the convenience of 
the railroad company, or operated for some reason for which the department is not 



RAILWAY MAIL PAY. 37 

responsible. In some cases it consisted of the operation of a full 60-foot car where 
the department asked for only 30 feet of space. Sometimes it represented the opera- 
tion of a car beyond the terminus of an authorized line. In other cases, it represented 
the operation of a car over a rail line, where no mail service was authorized to be 

Performed, and sometimes it was the operation of an apartment car over a line on 
unday where no railway post-office service was performed on Sunday, although 
performed on week days. Those cases the dej)artment determined were not properly 
chargeable to the mail service, and the space involved was designated as dead space 
and charged to the passenger service. Deadhead space is space which was operated 
by the companies in excess of the immediate needs of the service, but which the 
department believed the mail service was properly chargeable with as being inci- 
dental to the operation of the authorized service, as, for instance, where a 60-foot car 
was authorized in one direction and a 40-foot car in the opposite direction. If that 
necessitated the operation of a 60-foot car in each direction, it was thought that the 
mail service should be charged with the entire space both ways; therefore the addi- 
tional 20 feet in the return movement was designated as deadhead space and charged 
to the mail service; that is combined with the mail space but set out separately so 
that Congress might know what the deadhead space amounted to in its relation to 
the rest of the service. 

In connection with car-foot-mile concessions it may be well to 
refer to another aspect of the above-mentioned difference between 
the Post Office Department and the railroads. The department 
asserted that the raiboads were receiving from their mail service a 
revenue of 4.14 mills per car-foot mile, and from their passenger 
service 4.16 mills. The railroads claimed that they were receiving 
3.23 mills per car-foot irAle from mail, and 4.35 mills from their 
passenger service. (Prehminary report, p. 11.) This discrepancy in- 
dicated to the railroads that the Post Office DepartmiCnt had excluded 
from the mailservice and charged to thepassengerserviceso-called dead 
space, which had no proper application to the latter service. They 
claimed in effect that if the dead space was to be excluded at all it should 
have been excluded from both services, so that the relative percentages 
of cost and revenue would not have been affected . The result of these 
differences was the creation of a departmental and railroad committee 
to ascertain whether same could be adjusted. By reference to page 
324, of the Hearings, will be found a joint letter signed by the 
representatives of the respective interests, addressed to the chairman 
of this joint committee, wherein the earnings per car-foot mile in 
mail service are stated to be 3.37 mills, and in passenger service 4.34 
mills, when dead space was counted as the railroads contended. 
This letter reads as follows: 

March 15, 1913. 
Hon. Jonathan Bourne, Jr., 

Chairman Joint Committee on Postage on Second-Class Mail 

Matter and Compensation for the Transportation of Mail, 

Congress of the United States. 

My Dear Mr. Chairman: In response to the direction of the joint committee at 
its session February 12, 1913, the undersigned committees were designated by the 
Second Assistant Postmaster General and Mr. Ralph Peters, chairman committee on 
railway mail pay, to represent the Post Office Department and the railroads, respec- 
tively, to consider the differences in the statements of revenue per car-foot mile 
received by the railroads from the mail service and from other passen2,er train services, 
as computed by the department and the committee on railway mail pay. 

The earnings per car-foot mile from the mail service and other passenger services 
as stated by the committee on railway mail pay were 3.23 mills for the mail service 
and 4.25 mills from other passenger services. These figures were computed from 
the data as reported by the companies represented by the railway mail pay committee 
and covered 178,716 miles of service. 

The earnings per car-foot mile, as stated by the Post Office Department in its memo- 
randum dated January 17, 1913, in reply to the statement of the railroads entitled 
"Mail carrying railroads underpaid," were 4.14 mills for mail service and 4.16 mills 



38 RAILWAY MAIL PAY. 

for other passenger services. These figures were computed from the data as to space 
reported to the department by companies representing approximately 175,922 
miles of service as reclassified by the department. 

The differences between the car-foot-mile earnings by the two calculations are 
due entirely to the fact that the Post Office Department upon receipt of the data 
as to space from the railroads made certain modifications therein, based upon the 
space deemed by the Post Office Department to be necessary for its purposes and upon 
its rules with respect to assigning other space reported by the companies as mail 
space, which resulted in a reassignment of the car-foot-mile space to the different 
subdivisions of passenger train service. 

A computation made by the Post Office Department from the data reported by the 
railroads, representing 187,760 miles of service, as actually operated in November, 
1909, without any of the changes and modifications which the department deemed 
necessary and proper to make in preparing Document 105, brings the following 
results: 

Mills. 

Earnings per car-foot mile in mail service 3. 37 

In other passenger services 4. 34 

The matter of an inquiry into the cost of construction, operation, and maintenance 
of railway postal cars, which you also referred to the committee, is being investi- 
gated, and upon receipt of certain information asked for from the companies a further 
report will be made relative thereto. 
Yours, very truly, 

Joseph Stewart, 
C. H. McBride, 
A. N. Prentiss, 
Committee Representing the Post Office Department. 

H. E. Mack, 
V. J. Bradley, 
H. P. Thrall, 
Committee Representing the Railroads. 

But the Post Office Department did not wish to indicate by this 
letter the acceptance of the railroad point of view regarding dead 
space, as will be made plain from the following testimony of Hon. 
Joseph Stewart, Second Assistant Postmaster General: 

The full letter is set forth on page 324 of the hearings. There is nothing in the 
language used which will justify the conclusion? that the Post Office Department's 
representatives conceded that the space so reported by the railroad companies and 
unchecked by the Post Office Department as deemed " to be necessary for its purposes 
and upon its rules with respect to assigning other space reported by the companies as 
mail space " was the proper space to be used as representing the mail service. The pur- 
pose of the letter was merely to state to the chairman the reasons for the difference in 
the results obtained by the railroads' committee and the Post Oflice Department. 
This must be well known to the representatives of the railroads who signed the letter, 
for the representatives of the department declined to sign any reply until it was so 
worded as in their opinion would make it perfectly clear that no concession as to 
the correctness of the railroads' claims of erroneous assignment of space was made in 
the letter by the department. It is therefore difficult to understand why this state- 
ment is made in the brief of the railroads' committee. (Hearings, p. 1014.) 

Responding to a request for his views on this subject, Mr. Lorenz 
said : 

I can not see how there can be two Oj^^inions. It seems to me just as you can not 
operate a freight service without hauling empty freight cars, and just as you can not 
operate passenger service without hauling empty space, you can not operate mail 
service without hauling empty space, and in comparing the various departments, 
either on cost or revenue basis, you should include all of the space used and unused 
which is hauled in connection with that service, and I can not understand, therefore, 
why on this particular point the Post Office Department should have rejected the dead 
space from the mails and put it in the passenger service. It seems to me that there- 
they made a clear error. (Hearings, p. 514.) 

The question of car space as represented by the so-called ^'dead'' 
space continued to be a bone of contention between the railroads and 
Post Oflice Department to the end of the hearings. 



KAILWAY MAIL PAY. 39 

ALLOWANCE FOR CAPITAL CHARGES. 

While the Post OjSice Department in its letter of January 9, 1913, 
conceded that amounts, '^ii any be necessary/' should be paid to the 
railroad company in addition to the operating expenses and taxes 
apportioned to the mail service, and 6 per cent thereof, as shall render 
the whole a proper proportion of a fair and reasonable return on the 
value of the property necessarily employed in connection with the 
mail service, yet the capitalization claimed by the railroad companies 
and reported by the Interstate Commerce Commission was never 
accepted by the department as representing the true capitalization. 
The department did, however, through its Second Assistant Post- 
master General, admit that if a full allowance were made for capital 
employed in mail service the $9,000,000 saving would be wiped out. 
The chairman asked Mr. Stewart the following question (Hearings, 
p. 8): 

The Chairman. What change would the last suggested bill, printed on page 109 
of this blue pamphlet, make on the $9,000,000 estimated difference in payment to the 
railroads, as indicated in Document 105? How much, if any, would it decrease that 
$9,000,000 difference in pay? 

To this Mr. Stewart replied: 

Stating from a general impression of the subject — and that is all I have — I should say 
that it would eliminate the $9,000,000; that is, if a fair return were allowed the railroad 
companies upon a fair valuation of the property employed in performing the mail serv- 
ice in addition to the cost of performing it and 6 per cent. The aggregate amount paid 
to railroad companies now is probably not in. excess of what that aggregate amount 
would be. 

Short-Line Railroads, 
talbott bill. 

Representatives of these roads advocated the passage of what is 
known as the Talbott bill (H. R. 4044, 62d Cong., 1st sess.), set out 
in full on page 71 of the preliminary report. The provisions of that 
bill are reconm ended by Mr. John N. Drake, secretary of the Short- 
line Railroad Association, in a letter dated December 31, 1912, and 
addressed to the Senate Committee on Post Offices and Post Roads 
(prelin inary report, p. 25), and again in a letter dated June 10, 1912, 
addressed to the House Committee on the Post Office and Post Roads 
(Hearings, p. 830). The Talbott bill proposed four amendments to 
the present law: 

r 1. That routes carrying their whole length an average weight of mail per day of not 
more than 500 pounds should receive $75 per mile per year. 

2. That the weighing of the mails should not occur less frequently than once in 
each year. 

3. The discontinuance of the delivery of mails beyond the depot of the railway 
mail carrier. 

4. That the allowance for space used for railway post office purposes in apartment 
cars should be paid for at pro rata of the rate of compensation allowed for postal cars 40 
feet in length. 

Representatives of the short-line roads opposed the adoption of 
any space plan and favored the continuance of the weight basis with 
the modifications above suggested. A number of short-line railroad 
representatives appeared and testified before the joint committee on 
March 16 and 17, 1914, as will appear by reference to pages 1178-1245 
of the Hearings. 



40 KAIL WAY MAIL PAY. 

BUCKLAND PLAN. 

The author of this plan was Mr. E. G. Buckland, vice president of 
the New York, New Haven & Hartford Railroad Co. He appeared 
before the committee on February 17, 1913, and submitted a bill. 
(Hearings, p. 268.) His bill in substance provides that the rates to be 
paid for the carriage of mail should be on a basis of agreement be- 
tween the Post Office Department and the railroads, and in case of 
disagreement the matter should be referred to the Interstate Commerce 
Commission. Attention is called to this plan particularly for the 
reason that it provides for making the performance of mail service 
obligatory upon the railroads. He is the only railroad representative 
appearing at the hearings who favored a provision of law compelling 
the railroads to carry the mail. His bill is set out in full on page 
939 of the hearings. 

Bkiefs. 

It was the hope and expectation of the committee, as announced 
by the chairman on May 14, 1913 (Hearings, p. 711), that the hearings 
would close on that date. Contemporaneous requests were made 
at that time by Hon. Joseph Stewart, Second Assistant Postmaster 
General, and Mr. Ralph Peters, president of the railroads' committee 
on railway mail paj', for permission to file briefs for the interests 
they respectively represented. The request was granted and the 
hope expressed by the chairman that both briefs would be filed by 
the 1st of June. 

The printing of the hearings of May 1 4 was delayed, awaiting the 
anticipated filing of the briefs referred to and the filing of other 
information requested of the Post Office Department. 

BRIEF SUBMITTED BY RAILROADS. 

[Hearings, pp. 720-738. June 26, 1913.] 

On June 26, 1913, the railroads submitted their brief in type- 
written form, the main points of which, briefly stated, were as 
follows : 

1. In so far as House Document No. 105 (62d Cong., 1st sess.) may have seemed to 
support the allegation that the mail-carrying railways are overpaid in the annual 
sum of $9,000,000, or any other sum, that conclusion has now been officially abandoned 
by the Post Office Department and it has been made plain that, properly understood, 
that document demonstrates that these railways are actually underpaid. 

2. The existing law has never worked to the disadvantage of the Government, but 
has failed to do justice to the railways by reason of infrequent weighing; absence of 
pay for nearly 40 per cent of the space occupied as traveling post offices ; the perform- 
ance without pay of side and terminal messenger service; and the unjustifiable reduc- 
tion in pay by the act of Congress dated March 2, 1907, supplemented by order No. 
412 of the Postmaster General, changing the divisor. 

3. Mails should be weighed annually. 

4. Railways should be paid for apartment cars. 

5. Railways should be relieved from the performance of side and terminal services 
or fairly paid therefor. 

6. The weight basis is simple and, with the modifications above suggested, will be 
fair both to the Government and to the railways. 

7. In effect a cost-space basis Is impracticable and inequitable. 

8. Railroads should not perform the mail service for the Government for less com- 
pensation than for a similar service performed for persons other than the Government. 

9. Proof is conclusive that the railroads are underpaid not less than 115,000,000. 



RAILWAY MAIL PAY. 41 

The department's brief not having been received, the chairman, 
on July 9, 1913, addressed the following letter to Hon. Joseph Stewart: 

At the last hearing of the joint committee you expressed a desire to file on behalf of 
the Post Office Department a brief or summary from the department's viewpoint, of the 
testimony before the joint committee on the subject of railway mail pay. The railroad 
companies, who at the same time expressed a similar desire, have, through Mr. Ralph 
Peters, chairman of the committee on railway mail pay, filed their brief, and the print- 
ing of volume 5 is now being delayed awaiting the submission of your brief and receipt 
of two statements referred to in separate letters addressed to you of this date. If an 
early submission of the brief is not practicable, I shall have to send volume 5 to the 
printer without its being included, although I would be greatly disappointed if the 
necessities of the case required the printing of the brief to be postponed for insertion 
in a pamphlet by itself. 

Under date of July 12, 1913, Gen. Stewart replied as follows: 

I have to inform you that the matter is being given attention, but, owing to the fact 
that I am obliged to be absent from the city during the greater part of the remainder 
of the month, it will not be practicable for me to submit the brief at an early date. I 
would suggest, therefore, if you deem it necessary that volume 5 of the testimony be 
promptly published, that the department's brief be published in a separate volume. 

The brief referred to was not filed with the joint committee until 
January 21, 1914. 

On March 11, 1913, the Post Office Department was requested to 
submit a statement respecting differences between services rendered 
to the department by the railroad companies in the performance of 
mail service and services rendered to the express companies. 

On March 21, 1913, a bill relative to electric car lines, prepared by 
Mr. Henry C. Lyons, secretary of the Boston Elevated Railway Co., 
and submitted by him to the joint committee on behalf of the Ameri- 
can Electric Railway Association, was presented to the Post Office 
Department by the chairman of the joint committee with the request 
that it prepare, at the earliest opportunity, such criticisms or sug- 
gestions as it might have to make in regard thereto, for submission to 
the joint committee. 

Neither of the two last-mentioned statements was furnished until 
July 25, 1913. These statements appear in the Hearings, pages 745 
and 780, respectively. 

There being no immediate prospects of the department's brief being 
filed, the subject matter of the hearings of May 14, 1913, including 
the railroads' brief was, on August 22, 1913, sent to the printer for final 
print, and same was received on August 25, 1913, and distribution of the 
completed volume promptly made to Members of Congress, members of 
the committee, officials of the Post Office Department, and others. 

In addition to the letter of the chairman of July 9, 1913, already 
referred to, and telephonic inquiries made in the interim, the chairman 
addressed the following letter to Hon. Joseph Stewart, dated De- 
cember 11, 1913: 

Referring to the hearings of February 12, 1913, volume 1, pages 221 and 222: 

I would like to inquire when the joint committee may expect a report relative to 
railway post-office cars. 

I would also like to inquire when the joint committee may expect to receive the 
brief in review of the testimony taken before us which, on page 711 of volume 5 of 
the hearings, you asked permission to file on behalf of the Post Office Department? 
As indicated in my letter of July 9, 1913, I was greatly disappointed that your brief 
was not ready for submission so that it might have been printed contemporaneously 
with the brief submitted by the railroads, appearing in volume 5. pages 720 to 736. 

Necessity for an early submission of the report and brief above referred to is apparent, 
and I wish you would therefore advise me promptly upon receipt of this letter when 
I may expect same. 



42 RAILWAY MAIL PAY. 

Under date of December 13, 1913, Gen. Stewart replied as follows: 

I have your favor inquiring regarding the report as to cars and the brief on behalf 
of the department. 

I am now, and have been for some time past, engaged upon annual reports, com- 
mittee hearings, and the preparation of the brief in the Court of Claims in the divisor 
case, which is to be reheard. However, the hearings have closed and annual reports 
are substantially finished. On account of the great urgency of the matter and agree- 
ments between the Department of Justice and the attorneys for the railroads, I am 
compelled to give precedence at present to the divisor case. I hope in a few days to 
have this off my hands, and after that the railroad matters have the right of way. I 
am expecting to get the report on cars to you in a few days and the brief for the de- 
partment as soon thereafter as it is possible to put it into shape. 

The department's brief was finally received in typewritten form on 
January 21, 1914, immediately printed, and on January 24, 1914, 
distributed to Members of Congress. 

REPORTS OF M. O. LORENZ AND R. H. TURNER. 

[Hearings, pp. 849-968.] 

Between tbe bearing of May 14, 1913, and the filing of the depart- 
ment's brief, Mr. M. O. Lorenz,^ associate statistician of the Interstate 
Commerce Commission, and Mr. R. H. Turner, secretary of the joint 
congressional committee, at the request of the chairman, reviewed the 
testimony and filed written reports. The report of the former is of a 
statistical nature and contains recommendations for change in the 
basis of pay, while that of the latter is a resume of the testimony taken 
before the joint committee. Their respective reports may be found 
in the Hearings, pages 849 to 897 and 899 to 968. 

MR. LORENZ'S REPORT. 

[Hearings, pp. 849-897.J 

Mr. Lorenz submitted what he denominated a ''weight-space and 
distance" basis bill. He recommended a combination initial and 
terminal charge for each one-way trip of a 60-foot car or equivalent 
thereof varjdng from $3 for weight under 1 ton to $5.50 for 10 to 11 
tons. In addition, he recommended a distance charge for each mile 
run per 60-foot car or equivalent thereof varying from 20.20 cents up 
to a maximum of 23.54 cents. In both the initial and terminal and 
the distance rates he provided for a higher charge for additional weight 
carried. He recommended quadrennial weighings to serve as a check 
on the space furnished as well as to ascertain the average load per car 
on which to determine the proper rate to be applied. The combina- 
tion of terminal and distance charges recognizes the principles that 
rates per mile should vary with the length of the haul. His rate table 
was so constructed that a higher average rate per car mile would be 
paid to the shorter line railroads than to the longer mileage railroads. 

His conclusion regarding the average rate to be allowed was as 
follows : 

Taking into account the maximum deduction of 10 per cent from the average 
passenger-train car-mile earnings of 25.4 cents referred to above, the writer has con- 
cluded that 22\ cents would probably not constitute an overpayment on the com- 
mercial principle, side and terminal services not being included. This would be an 
increase of certainly more than 10 per cent, but the per cent of increase can not be 
stated definitely until further compilations are made by the Post Office Department. 

1 At the request of the joint committee, Mr. Lorenz was given leave of absence without pay from the 
Interstate Commerce Commission from July 28 to Sept. 30, 1913, for the purpose of assisting the com- 
mittee in an analysis of the testimony. 



RAILWAY MAIL PAY. 43 

This is without reference to possible economies in loading. It may be said that a con- 
clusion involving such a large sum annually must receiye a thorough test, and in any 
case, even if we were convinced as to the soundness of the conclusion, it would be 
unwise to recommend a complete correction of the underpayment in a single year. 
Although the mail traffic is no immediate burden to the railroads at the present rate of 
pay, the payment being easily sufficient to cover current outlays on account of the mail 
for the roads as a whole, yet if we accept the principle that the mail service should 
bear its proportion of capital charges — in other words, that it should stand the cost of 
borro\^ang the capital which it utilizes — we can not escape the conclusion that the 
mail-pay adjustment must be in the du'ection of an increase. For these reasons the 
fate of 22^ cents per car-mile has been chosen for the average haul in constructing the 
rate table on page 873. If the raihoads think it too low, they are given in the suggested 
bill an opportunity of convincing the Interstate Comm.erce Commission of 1hat fact. 
Similarly, the Postmaster General would have the opportunity of protesting against it, 
if he thought it too high. If it be deemed unsafe for even a single year, a maximum 
amount to be disbiu*sed could be specified. (Hearings, p. 894.) 

Subsequently he indicated at the hearings (p. 1451) that the elimi- 
nation of weight would so greatly simplify the administration of 
the law that this elimination was perhaps justified, even though it 
involved an element of injustice. 

MR. turner's report. 

(Hearings, pp. 899-968.) 

Mr. Turner's report was mainly a summary of the testimony taken 
before the committee up to and including the hearing of May 14, 
printed in volume 6. 

He gave a sketch of the work of this joint committee, as well as 
of earlier committees or commissions, and explained fully the method 
of calculating mail pay under existing law (p. 906). He summa- 
rized the various suggested plans for amending the existing law, 
and discussed the proposal for Government ownership of railway 
post-office cars. Mr. Turner, from his study of the testimony, 
expressed it as his opinion that the railways were greatly under- 
paid, and that the space basis should be adopted, with a tentative 
rate of 25 cents per car mib, the rate to be subsequently adjusted by 
the Interstate Commerce Commission. 

POST OFFICE department's BRIEF. 

(Jan. 16, 1914, Hearings, pp. 987-1049.) 

Although the Post Office Department on May 14, 1913, requested 
and was granted permission to file a brief, as already indicated, its 
brief was not filed until January 21, 1914. 

In its brief the department described with particularity its method 
of procedure in compiling the data contained in Document No. 105; 
it attempted to refute the claim of the railroads as to underpayment; 
denied in effect that it made any admission whatever, either directly 
or indirectly, as to the true railroad capitalization, and with reference 
to the question of overpay or underpay the conclusion was reached 
that the railroads for the fiscal year 1910 received for transportation 
and railway post-office cars combined $1,616,532 over apportioned 
cost and capital charges, as against $9,000,000 in Document No. 1C5, 
which excluded capital charges. For the year ending June 30, 1913, 
the overpay was given as $319,832. (Hearings, p. 996.) 

The department reiterated its position as announced by Second 
Assistant Postmaster General Stewart (Hearings, pp. 656-657) with 
reference to what should be the proper gauge of determining the 
compensation the railroads should receive for carrying the mails. 



44 RAILWAY MAIL PAY. 

Here the doctrine of ^^ public utility" was announced as an important 
factor, the report of Prof. Henry C. Adams to the Wolcott-Loud 
Commission, 1901, being the main reliance and authority for its 
presentation. Because of the — 

1. Certainty, constancy and homogeneity of traffic; 

2. The certainty and regularity of payment; 

3. Railroads are not built primarily to carry mails; 

4. The protection to their mail trains which raihoads, as Government agencies, 
receive against unlawful acts in interference with or obstruction of the mails carried; 
and 

5. The principle of public utility — 

it was suggested that a reasonable rate to the railroads might be one 
materially below a commercial rate. 

This brief took exception to the claims of the railroads with refer- 
ence to dead space; stated that Mr. Turner's summary of the evidence 
in that respect and his deductions therefrom were erroneous in that — • 

he did not have in mind the instructions which governed the tabulation in accordance 
with which the railroad companies received credit for extra space in railway post- 
office cars where such operation was made necessary by the mail service, and could 
not have been aware of the fact that the larger part of dead space represented railroad 
operations for the convenience of the railroad companies and only indirectly incidental 
to the mail service. (Hearings, p. 1015.) 

It defended the department's method of apportioning unassign- 
able expenses between freight and passenger services; it took excep- 
tion to the railroads' claim that they should have annual weighings 
of the mail in order that they might be more adequately compen- 
sated for the service performed; also to their claim that they should 
be relieved of or compensated for the performance of side and ter- 
minal service, and receive pay for their apartment-car service in 
addition to the weight carried. The position of the department was 
not so much that the railroads should not receive pay for those 
respective services, but rather that they were receiving an aggregate 
compensation for the rendition of mail service sufficient to cover the 
expense of same and therefore such services should not be specifically 
paid for. 

The brief defends the so-called divisor order No. 412 and takes 
exception to the railroads' claim as to its illegality as expressed fre- 
quently in the hearings, and in their brief of June 26, 1913 (p. 726) ; 
also to what was said by Mr. Turner in his report, particularly on 
page 958 thereof, sustaining the view of the railroads that the order 
was made without authority of law. 

This order, briefly described, was one requiring that the whole 
num-ter of days included in the weighing period shall be used as a 
divisor for obtaining the average weights per day, instead of suc- 
cessive working days, excluding Sundays as heretofore. The rail- 
roads regarded this order as having been made without authority of 
law, and against the express desire of Congress, as indicated by its 
nonaction when the matter was before it. The railroads' attitude 
with reference to this order is stated by Mr. Newcomb, statistician 
for the railroads' committee in railway mail pay (p. 99 of the Hearings) 
which is as follows: 

It is well known that the reduction imposed by the act of March 2, 1907, was 
adopted as a substitute for the reduction which would have resulted had Congress, 
by its statutory enactment, required the whole number of days of the weighing period 
(including Sundays), instead of the number of week days or "working days" in that 



KAILWAY MAIL PAY. 45 

period, to be used as the divisor in determining the average daily weight fixing the 
basis of payment for each railway route. Both proposals were submitted to Congress, 
both were fully considered, and throughout this consideration they were regarded 
as alternatives; it was never by anyone contemplated or suggested that more than 
one of them should be adopted . After full consideration Congress adopted the former 
alternative and rejected the latter. Notwithstanding this decision of Congress, the 
Postmaster General then in office, on the very day that the alternative reduction 
received the signature of the President — that is to say, on March 2, 1907 — but not 
until the legislative act had passed beyond control of Congress, entered an order, 
known as "Order No. 165," which read as follows: 

"That when the weight of mail is taken on railroad routes the whole number of 
days the mails are weighed shall be used as a divisor for obtaining the average weight 
per day." 

Three months later, another Postmaster General having come into ofiice, the fore- 
going was rescinded and the following substituted: 

"That when the weight of mail is taken on railroad routes the whole number of 
days included in the weighing period shall be used as a divisor for obtaining the 
average weight per day." 

The brief defended the department's space-cost basis as announced 
in Document No. 105 and modified by its letter of January 9, 1913. 

On the whole, the brief simply reemphasized the differences that 
have existed between the railroads and the Post Office Department 
from the beginning of this inquiry. The department's brief developed 
nothing that had not already been before the committee, except that 
its doctrine of public utility was stated with more particularity, and 
further, that it had reduced its claim of overpay to the railroads from 
$9,000,000 to $1,616,532 as of 1910 and $319,832 as of 1913, respec- 
tively. 

Executive Sessions. 

[January 20 and February 2 and 3, 1914.] 

On January 20, 1914, the committee held its first executive ses- 
sion. At this meeting Hon. Joseph Stewart and assistants, Messrs. 
C. H. McBride and A. N. Prentiss, and Mr. M. O. Lorenz were present. 
The purpose of the meeting was to arrive at some basis on which a 
definite conclusion could be reached in the inquiry with which we 
were charged. 

On February 2 and 3 executive sessions were again held, at which 
the same officials were invited to be present. At these meetings the 
plan of Mr. Lorenz, as presented in Hearings, pages 868-876, among 
other things, was discussed. The department finally presented a 
tentative draft of a bill for the committee's consideration, adopting 
an initial and terminal charge and aline charge basis as recommended 
by Mr. Lorenz, but differing in other provisions from Mr. Lorenz's 
plan. The rates he suggested were considerably reduced. 

depaktment's third plan. 

A Tentative Draft of Suggestions for Recommendation for 
Legislation and Regulation of Railroad Mail Service and 
Compensation Therefor. 

[Hearings, Feb. 12, 1914, pp. 1051-1062.] 

On February 12, 1914, the Post Office Department formally sub- 
mitted its bill entitled as above, together with an explanatory state- 
ment of same. The bill contains 43 paragraphs or sections. While 
the sections of the bill are not numbered, they will, for convenience 



46 EAILWAY MAIL PAY. 

and identification, be numbered from 1 to 43, only those sections 
containing what are regarded as saUent features being commented 
upon. 

Section 1 (p. 1057) authorizes a readjustment of compensation. 

Section 2 (p. 1057) authorizes a restatement of railway mail routes 
in such manner as the Postmaster General may deem proper. 

Sections 3, 4, 5, and 6 (p. 1057) provide for a departure from the pres- 
ent weight basis and the substitution of a space basis, the units upon 
which compensation is to be determined being the full R. P. O. car, 
the apartment car, and storage car, closed-pouch service, and side, ter- 
minal, and transfer mail service. Four standard sizes of full railway 
post-office cars, five standard sizes of apartment cars, and four of 
storage cars are provided for, and not more than 40 feet of storage 
space may be authorized in baggage cars on trains upon which full 
railway post-office cars or apartment cars are not operated. 

Sections 7 and 28 (pp. 1057 and 1060-1061) require the railroads to 
carry all employees of the Post Office Department free when directed 
by the Postmaster General so to do. This is now being done by 
regulation, the law only requiring free transportation for employees 
in charge of the mails. 

Sections 10, 11, 12, 13, 14, 15, and 16 (pp. 1057 and 1058) prescribe 
maximum rates for the various classes of service, namely: Railway 
post-office, apartment and storage cars, and for the respective services 
in rddilion, and initial and terminal rate, which are also maximum 
and not fixed rates. Lower maximum rates are also provided where 
wooden rather than steel cars are furnished. 

Section 17 (p. 1058) provides that closed-pouch mail service shall 
be paid for on a basis of weight. 

Section 18 (p. 1058-1059) relieves the railroads from side and 
terminal service ; and gives the Postmaster General, in his discretion, 
the power to employ mail messengers under existing law or after ad- 
vertisement to contract with either the railroads or with third and 
fourth class postmasters for such service. 

Section 19 (p. 1059) provides that land-grant-aided railroads shall 
receive only 80 per cent of the rates that nonland-grant railroads 
receive, which is simply a restatement of the present law. Such 
railroads, however, are relieved of side, terminal, and transfer mail 
service. 

Section 20 (p. 1059) defines initial and terminal rates. For that 
part of the rate covering loading and unloading the amount to be 
paid shall not exceed 12 cents a ton, and for the remainder of the 
rate covering lighting, switching, etc., there shall be a variation in 
the amount to be paid based on cost of construction and maintenance 
of R. P. O. apartment and storage cars. 

Section 21 (p. 1059) authorizes an annual weighing of closed pouch 
mail and requires that the whole number of days included in the 
weighing period shall be used as a divisor. 

Sections 22 and 23 (p. 1059) provide that the maximum space in 
either direction shall be regarded as the space necessary in both 
directions. These sections are applicable to railway post-office, 
apartment, and storage cars, the last named, however, being subject 
to the qualification that no compensation is to be paid where the 
railroad company makes use of the car on the return movement. 



EAILWAY MAIL PAY. 47 

Section 24 (pp. 1059-1060). New and additional service may be 
authorized at maximum rates, and service may be reduced or dis- 
continued with pro rata reductions in pay. 

Section 25 (p. 1060) gives the Postmaster General, in cases of emer- 
gency, authority to contract for cars other than steel or steel under- 
frame within the maximum rate, due consideration in the amount 
paid being given to inferior construction of the car. 

Section 26 (p. 1060) provides that — 

service over property owned and controlled by another company or a termin?! com- 
pany shall be considered service of the railroad company using such property, and 
not that of the other or terminal company. 

Section 27 (p. 1060) requires all railroads carrying the mails to 
furnish all necessary facilities for caring for and handling same while 
in their custody; to place cars or parts of cars at stations before 
departure of trains; to provide station space and rooms for hand- 
ling, distribution, and transfer of mails in transit, and for offices and 
rooms for the employees of the Postal Service engaged in such trans- 
portation when required by the Postmaster General. 

Section 29 (p. 1061) empowers the Postmaster General to fine the 
railroads such sum as he may deem proper for failure to provide cars, 
etc., and maintain them. The present law prescribes a penalty of 
10 per cent reduction of the rates paid. 

Section 30 (p. 1061) empowers the Postmaster General to fine the 
railroads in such sum as ne may deem proper for their failure to 
transport the mails. The pr'^sent law fixes the penalty for such fail- 
ure at 50 per cent rsduction of the rates paid. 

Section 31 (p. 1061) authorizes reductions in pay where there is 
a reduction in service or frequency of service; also authorizes imposi- 
tion of fines, limited to the value of the service not performed and 
not exceeding three times its value if the failure be occasioned by 
the fault of the railroad company. 

Section 32 (p. 1061) makes proposed law applicable to service 
partly by railroad and partly by steamboat. 

Section 33 (p. 1061) excludes from the provisions of the act mails 
conveyed under special arrangement in freight trains at rates not 
exceeding those approved by the Interstate Commerce Commission. 

Section 34 (p. 1061) requires railroad companies to submit under 
oath when and in such forms as may be required by the Postmaster 
General evidence as to the performance of service. 

Section 35 (p. 1061) authorizes the Postmaster General to have 
such weights of mail taken and ascertainments of needed space 
made when deemed by him necessary and makes provision for the 
payment of expenses thereby incurred. 

Section 36 (p. 1061) requires the Interstate Commerce Commission 
to report to the Postmaster General the revenue received by railroad 
companies from express companies for service rendered in the trans- 
portation of express matter and authorizes the Postmaster General 
to fix rates not exceeding those so reported, and makes it the duty 
of railroad companies to carry mail matter other than that of the 
first class at rates so fixed by the Postmaster General. 

Section 37 (p. 1062) confers power on the Interstate Commerce 
Commission to make rates on fourth-class matter and periodicals 
and authorizes the Postmaster General to arrange for transportation 
of such mail at rates so fixed. 



48 RAILWAY MAIL PAY. 

Section 38 (p. 1062) authorizes Postmaster General to distinguish 
between and arrange for less frequent dispatches of mail matter of 
the third and fourth classes wherever he can effect economies. 

Section 39 (p. 1062) authorizes the Postm^aster General to return 
to the mails, for the utilization of car space paid for and not needed 
for the mails, postal equipment and supplies theretofore withdrawn 
from the mails and transported by freight or express. 

Section 40 (p. 1062) authorizes Postmaster General to return to 
the mails in cases of emergency post-ofhce supplies mentioned in 
the preceding section, but requires him to pay regular rates where 
additional space is required. 

Section 41 (p. 1062) authorizes Postmaster General to take weights 
of mail for statistical purposes. 

Section 42 (p. 1062) compels the railroads to perform mail service 
not on a basis of contract but upon the mandatory direction of 
Congress. 

The provisions of the department's third suggested plan are set 
forth in full on pages 73-77 of this report. 

HEARINGS REOPENED. 

In view of the railroads' continued objections to the inauguration 
of any space plan and their insistance upon the present weight basis, 
with the modifications heretofore referred to; the different views 
expressed on the question of underpay or overpay; and finally the 
Post Office Department's abandonment of the plan recommended in 
Document No. 105, as well as its subsequently modified plan, and 
the substitution of a new plan (Hearings, p. 1057), the hearings were 
reopened, and on February 26, 1914, the railroads replied to the 
statement of the department. 

Railroads' Reply Brief. 

[Hearings, February 26, 1914, p. 1063.] 

The railroads reaffirmed the position taken by them in their first 
brief (Hearings, p. 7 21); called attention to the incompleteness and 
inaccuracy of Document No. 105, assailing the integrity of the document 
itself in that it did not publish the items of revenue received by the 
railroad companies from passenger or express business so that Con- 
gress could make a comparison between these and the revenue from 
mail transportation; that there was no publication of the expenses 
at railroad stations or of terminal service, or of personal transporta- 
tion of officers and employees of the Post Office Department, although 
this information was furnished to the Postmaster General; that there 
was no statement of the fuU extent of the car space as originally 
reported by the railroad companies as being devoted to passenger^ 
mail, and express services. While stating that they did not report 
any ''dead space" whatever, they insisted that if they were 
expected to report ''dead space" in the mail service they should 
also have been called upon to report "dead space" in the 
passenger and express services, in which the proportion is greater. 
They reiterated that they were underpaid approximately $""5,000,000, 
which underpayment was not shown by Document 105 mainly for twa 
reasons: 

(1) That the Post Office Department applied incorrect ratios in 
the division of railroad operating expenses, and 



RAILWAY MAIL PAY. 49 

(2) Failure to apply the correct percentage of car space to be 
charged against the passenger service. 

They also asserted that a strictly commercial rate should be the gauge 
of railroad mail pay, taking a strong issue with the Post Office Depart- 
ment in its advocacy of the doctrine of public utility. 

Railroad Companies Oppose the Post Office Department's 

Third Suggested Plan. 

[Hearings, March 16, 1914, pp. 1112-1245.] 

The railroads, in their testimony, were unanimous in their opposi- 
tion to the proposed bill of the department. They were opposed to 
it because, as expressed by Mr. H. E. Mack, mail-traffic manager of the 
Missouri Pacific Railway Co. (Hearings, p. 1123), ^'space as a main 
factor to fix mail pay is fundamentally wrong, because the volume of 
mail does not automatically determine the space required in its trans- 
portation"; also, that the '^ relationship with the Post Office Depart- 
ment would be unsatisfactory upon that basis," and that there should 
be "sL definite basis for the transportation service rendered" — 
namely, ^'weight with the object of transportation itself fixing and 
determining the exact volume of transportation service rendered and 
which is free of any element of opinion or judgment in the transaction." 

Their main points of objection to the department's proposed bill 
were as lollows: 

(1) That the space basis is fundamentally wrong. 

(2) That such a basis is not administrable. 

(3) That it leaves too much discretion to administrative officers. 

(4) That its provisions are indefinite and uncertain. 

(5) That the promulgation of the plan evinces a purpose on the 
part of the Post Office Department to reduce railway mail pa} . 

6. That it empowers the Postmaster General to pay the railroads 
at rates ''not exceeding" those stated in the bill. 

Post Office Department's Reply to the Railroads. 

[Hearings, pp. 1247-1317, Mar. 24. 1914.] 

The departm^ent here reiterated its claim that the railroads were 
overpaid; defended its treatment of dead space; reaffirmed its 
position that the railroads shall receive less than a commercial rate 
lor carrying the mails; asserted that the claims of the railroads' 
committee for annual weighings and for apartment car pay had 
no merit, because the existing rates of pay were ample to cover the 
increase in w^eights during the four-year period and to compensate, 
on the average, for space in apartment cars as well as in full cars. 

A prominent feature of this brief was a statement showing a 
comparison between revenues received by railroad companies for 
express and mail services. It presented two tables: 

(1) A comparison of actual first-class express rates per 100 pounds 
between representative points; the actual average rates of pay per 
100 pounds weight of mails to the railroad companies operating 
railroad mail routes between such points; 50 per cent of the express 
rates, respectively, the amounts assumed as received by the railroad 

56211—14 4 



50 RAILWAY MAIL PAY. 

companies for the service; and the excess of the mail rate over 50 
per cent of the express rate, or the reverse where it exists. (Hear- 
ings, pp. 1272-41.) 

(2) A similar comparison between the same points on a 40-pound 
package. (Hearings, pp. 1275-1277.) 

The Post Office Department's interpretation of these tables is as 
follows (Hearings, p. 1277) : 

In most cases the revenue received by the railroad companies for the carriage of 
100 pounds and 40 pounds of mail matter between the points named is in excess of 
the revenue received from the express companies for the carriage of express packages 
of 100 pounds and 40 pounds, respectively, between the same points. The differ- 
ences in the rates varied considerably, but in a majority of cases the excess of the 
mail rate over the compensation for the express is material. 

The mail rates mentioned in the tables referred to are for trans- 
portation alone and do "not include revenue received by the railroad 
companies for railway post-office cars operated over the routes. 

The department figured that if railroad revenues from mail were 
computed on their estimated ton-mile revenue from express and 
translated into pay based on space, the Government would have to 
pay $46,494,978.58, on a basis of earnings prior to February 1, 1914, 
but that this figure would be perhaps 16 per cent less under the new 
express rates; that is, it would be changed to $39,055,782.01. 

In a footnote, page 1279, the Post Office Department gave the reve- 
nue from express per car-foot mile as 3.56278 plus mills, or 21.37668 
cents per 60-foot car mile as against its figures (Hearings, p. 1008) of 
3.865 mills per car-foot mile or 23.19 cents per 60-foot car mile. 

The Post Office Department stated, in a letter dated May 28, 
1914, that the express revenue per 60-foot car mile was 22.647 cents 
as of the year ending June 30, 1910, and 23.088 cents as of Novem- 
ber, 1909. It was stated, however, that the department had no 
means of checking the revenues for November, 1909. 

FINAL HEARINGS. 

[Apr. 1, 2, and 3, 1914, pp. 1319-1554.] 

Hearings before the committee were closed on the dates above 
mentioned. The railroads, through Mr. Ralph Peters, chairman of 
the railroads' committee on railway mail pay, submitted their final 
brief. The salient features discussed in these three days' hearings 
were : 

(1) The application made by the department of its express figures; 

(2) Authorizations of car service by the Post Office Department; 

(3) Dead space; and 

(4) Overpay or underpay. 

(l) EXPRESS. 

The railroads deny that they are receiving more from mail than 
express if a comparison is made on a proper basis. In a discussion 
of relative earnings from mail and express, Mr. James Peabody, of the 
Atchison, Topeka & Santa Fe, makes the following statement : 

I think Mr. Stewart's assumption is that the railroads are satisfied with their receipts 
from the express companies. I think he has overlooked the fact that the rates which 
he has quoted are rates compelled by law. So far as that is concerned, under the de- 
cision the railroads were not allowed to intervene and present their case, and further. 






RAILWAY MAIL PAY. 51 

I doubt if there is a railroad company in the United States that would renew its con- 
tract to-day on the basis of the present contract. I will say, so far as the Santa Fe is con- 
cerned, we will not renew our contracts in 1916 at any such rate as 55 per cent. (Hear- 
ings, p. 1315.) 

With reference to the Post Office Department's express figures, the 
chairman addressed the following question to Mr. Stewart (Hearings, 
p. 1316): 

The Chairman. From the presentation that you have made relative to the express 
charges, what conclusions have you come to in your own mind as to their application 
to the question we have under consideration— railway mail pay? 

Mr. Stewart. I think they have an application that is very direct. I think they 
prove without any question whatever that the rates that have been suggested by the 
department are not too low. I have serious doubt in my mind whether those rates 
are not too high in view of the facts we have presented in regard to express revenues 
to the railroad companies. 

The railroads in controverting the department's position with refer- 
ence to the application of its express figures, submitted tables — 

based on the first 15 examples quoted by the department in its 100-pound table on 
page 1272, and show on successive lines the rate which the department has worked 
out for each package of 100 pounds in weight in comparison with what the rate would 
be if it were based upon 100 1-pound packages. The ton mileage in both cases would 
be the same. 

Based on 100 1-pound packages it was stated that the railroads 
would receive a higher revenue from their express traffic than from 
their mail traffic, ranging from 309 per cent to 3,520 per cent; on 40 
1-pound packages the earning from express would be greater, ranging 
from 311 per cent to 3,400 per cent. 

According to the railroads' contention the Post Office Department 
made its comparison on minimum earnings, and in order to show the 
unfairness of the department's position they have taken their maxi- 
mum earnings as a test for the comparison. They think the proper 
test would bo between the two extremes. 

On page 1354 of the Hearings, Mr. Peabody, of the Santa Fe 
system, says : 

The revenue which we get for carrying 100 pounds of express is not based upon a 
rate on 100 pounds, but based upon a rate on the varioups packages constituting 100 
pounds. 

The railroads, however, contented themselves with criticisms which 
wete intended to throw doubt on the department's conclusions, 
asserting that its new express data had been introduced so late in the 
hearings that it was not possible to make a satisfactory comparison 
(p. 1335). 

(2) AUTHORIZATIONS OF CAE. SERVICE. 

The controversies on this subject will perhaps be made clear by 
the following inquiry propounded by Mr. Lloyd to Mr. Stewart 
(Hearings, p. 1427): 

Now, let us see if we understand each other, because this, it seems to me, is \dtal, 
and that is the difference between you people, as I understand. If a car actually 
starts at St. Louis and goes to the Mexican border and returns to St. Louis, as demanded 
by you, as I understand this law, the car has made a round trip where to? Not on a 
route, but on several routes. It has made a run from St. Louis to the Mexican border 
and return, and that is the round trip of that car. If that is the round trip of that car 
and at any place on the journey, according to your proposed law, you authorize the 
use of a 60-foot space, you must pay for that 60-foot space the whole distance, out- 
going and incoming. Is that right? 



52 RAILWAY MAIL PAY. 

To this Mr. Stewart replied: 

Hardly right. That would leave the control of the space for which the department 
should pay entirely to the railroad. If you are going to combine a through car run over 
several routes and compel the department to pay for the maximum needed on any 
route it gives the company the opportunity to run one size car out to fill these several 
authorizations. That will not be fair to the department, (Hearings, pp. 1427-8.) 

The discussion showed that it was very difficult to state in a law 
a definite principle which would control the length of run for which 
authorizations of various size cars or apartments were to be made. 
According to the view of the Post Office Department this should be 
left entirely to the discretion of the Postmaster General, but the rail- 
road companies were anxious that some restriction should be placed 
upon arbitrary changes in authorizations which would compel them 
to haul full cars when only fractions of cars were authorized for a 
portion of a run of the train. 

(3) DEAD SPACE. 

The significance of this was clearly indicated by the following 
question propounded by Mr. Lorenz to Mr. Stewart: 

Since the department insists on taking this position, I would like to ask Gen. 
Stewart if he could operate the Missouri Pacific and furnish the space the department 
has asked for in various length apartments and not have any of this dead space, so- 
called, left over, or whether any officer — the most efficient operating officer in the 
United States — could operate the Missouri Pacific and not have any dead space left 
over? (Hearings, p. 1499.) 

To this question Mr. Stewart replied as follows : 

Mr. Stewart. That would be pretty difficult to answer offhand. If you appljr it 
to a specific case, like that from Kansas City to Pueblo, such as you were discussing 
when we came in, I should say yes. 

Mr. Lorenz. I will admit there are individual cases, but I said where there is 
none of the dead space. 

Mr. Stewart. I would not be able to say that it could be done. (Hearings, p. 1499.) 

On page 1378 of the hearings Mr. Bradley makes the following 
statement: 

I would like to suggest in regard to the computation of car mileage as of November 
30, 1913, I think that it is quite likely that it would be diflicult for the department to 
make a satisfactory estimate, because of the inability to get a correct record of the stor- 
age car movement, especially the additional storage car movement, without actually 
going to the companies or to the Railway Mail Service and having the records kept. 
There has been a great growth in that class of service, largely due to the growth of the 
parcel post. If the computation was made from the railway post-office schedule made 
in the Railway Mail Service that is supposed to report the usual conditions, I do not 
think that an accurate estimate could be obtained. 

To this Mr. Stewart replied: 

We differ from Mr. Bradley on that. Furthermore, we would hardly take the chance 
of making a mistake on these figures without safeguarding oiu'selves in every way^ 
inasmuch as we are dependent upon them for our judgment as to the effect of these 
rates proposed in the suggested bill. (Hearings, p. 1378.) 

On page 1497 Mr. Stewart says: 

For storage space we have taken one-half of the return movement, because we have 
no statistics as to what proportion of the storage cars are used by the companies on their 
return trip, and nothing has been presented by the railroad companies which would 
be any guide. 



RAILWAY MAIL PAY. 53 

(4) OVERPAY OR UNDERPAY. 

With reference to express earnings Mr. Stewart, page 1509, says: 

When it is shown that if we paid the railroad companies for mail service on approxi- 
mately the same basis as express service, the amount- would have been 139,000,000 in 
1913 instead of $51,000,000. I think that fact alone is the most potent single one that 
has been developed in this inquiry. I have said, however, because I want to be 
absolutefy fair from all points of view, that there are differences between the two ser- 
vices, and those differences should be accounted for and carefully appraised in the 
consideration of these express statistics. I have myself tried to locate those differences 
and get a fair appraisal of them. The best that I could do was to submit an appraisal 
here of approximately $1,000,000. 

Then the following colloquy occurred between the chairman and 
Mr. Stewart (Hearings, p. 1510): 

The Chairman. Then am I to understand you would add $1,000,000 to $39,000,000 
and pay to the railroads $40,000,000 instead of $51,000,000. Is that your conclusion? 

Mr. Stewart. No; I think the conclusion will have to be made by the joint com- 
mittee. 

The Chairman. I understand that perfectly well, so far as the report of the joint 
committee is concerned , but I am asking for your individual deduction . I understand 
you to say there was a difference of a million dollars, according to the figures sub- 
mitted by you day before yesterdav, also in the evidence just submitted you have 
stated that the railroads would have received $39,000,000 instead of $51,000,000 that 
they are receiving to-da}^, and I want to know where that million dollars comes in. 

Mr. Stewart. The million dollars that I mentioned is the best information as to 
the value of those particular differences between the two services that I could locate, 
and I submitted the statement in detail in the record. 

And, again, on page 1511 the chairman says: 

The natural conclusion in my mind from these statements would be that you 
conclude that the railroads should receive $40,000,000 instead of $51,000,000 which 
they receive to-day for railway mail pay. I wanted to elucidate and see whether I 
caught your conclusion? 

Mr. Stewart. Your deduction is right so far as the figures are concerned for a com- 
parison between the two different rates. At no time have I said I think you ought to 
reduce the railway mail pay to that extent. 

With reference to the general questions of underpay and overpay 
the chairman and Mr. Lloyd made the following interrogatories of 
Mr. Stewart (Hearings, p. 1511): 

The Chairman. Under the relative presentation that you have made as to the 
difference between actual railway mail pa,y and express pay, under the new rate put 
into operation by the Interstate Commerce Commission, what conclusion have you 
come to in your own mind, if any, as to the difference betvv^een railway mail pay and 
express pay that the Government should pay for railway mail pay or how much weight 
should you give in your determination to the railway mail pay regarding the express 
pay? 

Mr. Stewart. I would give this weight to it, that I would not increase the rates 
which we have suggested here. 

Mr. Lloyd. In that connection have you ascertained definitely to your own satis- 
faction, whether the proposed rates under the new space plan which you suggest will 
add to or take from the amount of pay that is received by the railroad companies for 
carrying the mails? 

Mr. Stewart. We have made an estimate for 1913 which would indicate that the 
application of the proposed rates would make a reduction in the pay for 1913 of some- 
thing over $2,000,000. I do not remember the exact figures. 

On pages 1516-1518 of the hearings will be found the following 
colloquy between the chairman and Mr. Stewart: 

The Chairman. Gen. Stewart, I would like to see whether I have a correct under- 
standing. As I understand your conclusions with reference to overpay by the Gov- 
ernment to the railroads, they are based entirely upon the ascertainment set forth in 
Document 105. Is that true? 



54 EAILWAY MAIL PAY. 

Mr, Stewart. Yes, Senator; inasmuch as that is the only thing before us, it is the 
only ascertainment that has been made. 

***** * * 

The Chairman. Document 105 was the result of inquiries for the month of Novem- 
ber, 1909, made by the department upon the raihoads, and the tables were prepared 
by the department from the answers to those questions. That is true, is it? 

Mr. Stewart. No. I could not say that that is true. If I answered that "yes," it 
would not be correct, and if I answered it "no," it would not be correct. We have 
explained a number of times that the raihoad companies reported more space than we 
could accept, and, therefore, it is not based primarily on what they reported to us. It 
is based upon the reports of the railroad companies as properly revised by the depart- 
ment to represent the space needed and used. 

The Chairman. Then that comes to what I want to get at. Then the correctness of 
the deductions in reference to overpayment depends upon the correctness of the 
apportionment of tables prepared by the department upon the information submitted 
by the railroads in reply to inquiries submitted by the Government to the railroads. 
Is that correct? 

Mr. Stewart. That is substantially correct. 

The Chairman. Then the difference in dead space, the allotment between the 
department and the railroads is the crucial test as to the correctness of the deductions 
in reference to the question of overpay or underpay. Is that true? 

Mr. Stewart. That, I think, represents the material point of difference between 
the railroads and the department. 

The Chairman. That is the key to the problem of correctness of the dead-space 
apportionment, the key to the main factor? 

Mr. Stewart. I think so, in so far as Document 105 is concerned. 

The Chairman. So far as the conclusions in reference to the underpay or overpay, 
if the "conclusions are based solely upon the ascertainment and information, that 
being all available as contained in Document 105. 

Mr. Stewart. You are referring, of course, to Document 105 as shown, without 
reference to anything else that has been submitted to the commission, the consideration 
of express rates, etc.? 

The Chairman. I am, so far as the overpay or underpay is concerned; that is, so 
far as your own conclusions are concerned. 

Mr. Stewart. And without regard to any consideration of the special items 
I have submitted here which might be taken into account? 

The Chairman. I am not asserting anythng, but I am trying to put interrogatories 
to follow out your line and see how your thoughts appeal to my mind. 

Mr. Stewart. To make my answer complete to your question, which is very com- 
prehensive, I would have to insert at this point in the record all the things I have 
said which I think the commission should take into consideration, not solely those 
presented in Document 105, but all the other considerations as to whether the rail- 
roads were overpaid or underpaid. 

The Chairman. And you have come to a conclusion, as I understand it, that the 
railroads have been overpaid, and the testimony will show specific statements to the 
effect, if my memory serves me rightly. What value do you give to Document 105 
ascertainment? 

Mr. Stewart. I gave primary value to that. All these other considerations that 
I have mentioned simply accentuate the conditions shown by Document 105. For 
instance, when I say that Document 105, taken on its face, shows more revenue received 
than expenses fairly apportioned to the mail service, that is subject again to the 
criticism that I myself make against the plan, to the effect that it proceeds upon a 
most liberal plan of apportionment, which I pointed out this morning. 

The Chairman. I was not discussing the plan at all, but simply the conclusion 
or conviction in your own mind with reference to overpay or underpay, which is 
one of the phases of the study, and that your conclusions, which are definite, accord- 
ing to the testimony, are based primarily and, as I understood you, almost entirely 
upon Document 105 ascertainment. 

Mr. Stewart. So far as the specific figures are concerned which we have submitted, 
that is true. 

The chairman pursued the inquiry further by asking the following 
questions of Mr. Lorenz (Hearings, pp. 1518-1519): 

The Chairman. Dr. Lorenz, you have read all of the evidence that has been sub- 
mitted at the various hearings and have for a period of over two months devoted 
your time exclusively to a special study of this subject, and intermittently it has 
had your consideration for over a year. Now, outside of the information contained 



EAILWAY MAIL PAY. 55 

in Document 105 and other viewpoints submitted in the evidence, are there any 
other facts or additional information that occur to your mind that it would be wise 
to consider in our study of this subject? 

To this Mr. Lorenz replied as follows: 

It seems to me that the conclusion of the committee ought not necessarily rest 
entirely on Document 105; that there are other indications of what might be a fair 
rate per car mile, which help to determine the question of overpay and underpay 
that do not depend upon that particular tabulation for 1909. For example, the Post 
Office Department can make and has made estimates of the total amount of mail 
service measured in 60-foot car miles, and the result varies according to the method 
of estimating that service. In one estimate in which they charged the department 
with mail space based upon the three units of 15, 30, and 60 feet, they give us a figure 
of about 260,000,000 car miles as the equivalent of the Railway Mail Service 60-foot 
cars. That is not dependent on Document 105. Dividing that into existing 
revenue as reported by the Second Assistant Postmaster General, we get an idea of 
the existing revenue to the railroads per car mile for the mail service. The pay being 
$51,000,000, the car miles being 260,000,000, we get an average payment of some- 
thing less than 20 cents a car mile. 

That does not depend in any way upon Document No. 105, but it does involve the 
same contro versy that has come up in connection with this matter, because in that esti- 
mate of 260.000.000 car miles the department has been charged with a certain amount 
of dead space; that is to say. if they charge themselves with a 30-foot apartment 
when they need 20 or 25, it is obvious that they are charging themselves with a cer- 
tain amount of dead space, although not as much as the total amount invohed in 
Document No. 105; for example, under this three-unit system, if they needed a 30 foot 
apartment and the railroad company fm'nished a whole car, they would not be charged 
with the whole car, but only with the 30 foot apartment, because that is one of the 
units, consequently that element of dead space which exists would not be charged 
against the department under the three-unit plan. Ha . ing arrived, then, at the con- 
clusion that upon a fair apportionment of dead space which presumably would result 
from these three units, you have your starting point, the existing revenue of some- 
thing less than 20 cents a car mile. To know whether that is too high or too low, we, 
of course, have the basis of comparison with the average revenue received from pas- 
senger-train service, and that average is furnished by the Interstate Commerce Com- 
mission to this committee and is not open to much dispute, although it varies a little 
each year, although it must be considered that the a erage of approximately 25 cents 
is the result of considsring all of the dead space in the divit-or. because all of the car 
miles, whether they are empty or partly used are divided into the total passenger- 
train revenue. So there you have two figures which it seems to me are pretty well 
fixed and not open much to dispute and which do not depend on Document No. 105, 

The Chairman. That is the 260,000 000 car miles as figured by the department 
and the car mileage from the passenger service as figured by the Interstate Commerce 
Commission? 

Mr. Lorenz. Yes. Of course, the department made that estimate simply in re- 
sponse to a question of the committee, and possibly on revision they would change it 
somewhat. They have more recently submitted an estimate of 225,000,000 car miles 
when the authorization is made upon a different basis. In other words, the number 
of car miles with wliich the department charged themselves depends largely upon 
the units which they can authorize. If they can authorize 15, 20, and 25 feet they 
are obviously going to escape some of the dead space which they must assume if they 
authorize units of 15, 30, and 60 feet. 

CAR MILEAGE ESTIMATES. 

When the committee had reached tentative conclusions regarding 
rates a request was made of the department for an estimate as to the 

Erobable cost to the Government under these rates. The reply was 
ased on a service of approximately 260,000,000 car miles, as against 
an estimated 225,000,000 car miles required under the department's 
multiple unit plan. It was desired to check these estimates, if pos- 
sible, and Mr. Lorenz was asked whether it was possible to verify 
them in any way. He undertook to check the estimate as to the 
full R. P. O. and apartment-car service, but stated that he had no 



56 RAILWAY MAIL PAY. 

l^asis on which he could tabulate the mileage for storage car and 
closed pouch mail. 

The department furnished lists of all the trains utilizing the mails 
and estimates of the probable authorization of space on each train. 
These statistics were tabulated and a conclusion was reached by 
both the department and Mr. Lorenz that indicated approximately 
205,000,000 car miles for apartment and railway post-office car 
service. This was about 11,000,000 car miles less than the figures 
which the department had previously assumed for corresponding 
service. 

Mr. Lorenz stated that the only way he could compute the probable 
total car miles was by adding amounts corresponding to the propor- 
tions found in Document No. 105 for various classes of space, which 
indicated on a 60-foot-car basis for storage space 23,800,000 car miles 
and for closed pouch 6,700,000 car miles, making a total of 235,500,000 
car miles. The department at first substantially agreed with the 
closed-pouch estimate, but thought the storage space should be 
14,000,000 car miles greater — that is, approximately 38,000,000 car 
miles. In view of this difference, and since neither estimate was the 
result of accurate information, it was decided to test this matter further 
by getting reports from the field as to the actual storage cars run. At 
the request of the joint committee, the Postmaster General sent tele- 
grams to all of the division superintendents in the Railway Mail 
Service asking them for lists of the trains and storage cars actually 
run for each of the two weeks ending March 21 and May 23, respec- 
tively. The result of this inquiry indicates approximately 51,000,000 
car miles for storage-car service per annum, including the empty 
return. This assumes that the railroads would in no case make use 
of the empty cars. This surprising change in storage-car estimates 
would add about 13,000,000 car miles to the department's original 
estimate, which underestimate, combined with the overestimate of 
11,000,000 car miles above mentioned, added approximately 2,000,000 
car miles net to the department's original estimate of 260,000,000. 
The total then stood at approximately 262,000,000 car miles, but 
subsequently the department announced a result of a special inquiry 
regarding closed-pouch service. This indicated 164,817,446 service 
miles, but the department made no attempt to prorate this figure to 
a 60-foot-car basis. 

PASSENGER, PULLMAN, EXPRESS, AND MAIL REVENUE. 

Under date of May 5, 1914, the chairman addressed a letter to the 
president of the Pullman Co. at Chicago, 111., the object in view 
being to ascertain whether that company had any statistics which 
would show the revenue received by the railroads on account of 
Pullman business. 

The Pullman Co. replied as follows: 

Chicago, III., May 7, 1914- 
Hon. Jonathan Bourne, 

Chairman Committee on Transportation of Mail, Washington, D. C. 

Regret exceedingly inability to give information requested your letter 5tli, as keep 
no record of passenger miles, our rates being based on space occupied. Two pas- 
sengers may occupy one berth at same rate or six passengers on one drawing-room 
ticket. Seat-rate basis, 5 mills per mile; berth-rate, 63^ mills per mile for space 
but not per passenger mile. As explained above, your passengers per car is ap- 
proximately correct. 

John S. Runnells. 



RAILWAY MAIL PAY. 57 

On April 30, 1914, the chairman addressed a letter to the Second 
Assistant Postmaster General asking for a statement giving the rail- 
road average revenue on a 60-foot-car mile basis from passenger, Pull- 
man, express, and mail. A similar letter was addressed to Mr. V. J. 
Bradley, supervisor of mail traffic, Pennsylvania Railroad Co., and 
Mr. Ralph Peters, chairman of the railroads' committee on railway 
mail pay. A similar request was made of Mr. M. O. Lorenz, associate 
statistician for the Interstate Commerce Commission, personall}^. 

The Post Office Department in it: letter of May 2 gave the average 
passenger-car-mile revenue for the fiscal year ending June 30, 1911, 
as 25.43 cents. As to Pullman, it had no adequate data. On 
express it gave a figure of 21.37 per 60-foot-car mile. This rate, 
however, it reduced 16 per cent, the estimated percentage of reduc- 
tion in express rates by the Interstate Commerce Commission, which 
would reduce the express revenue for a 60-foot car hauled 1 mile to 
17.95 cents. (Fiscal year 1910.) 

As to mail, on the basis of Document No. 105, it adhered to its 
original figure of 4.14 mills per car-foot mile, or 24.84 cents per 60-foot- 
car mile, this amount, however, being reduced to 4.02 mills, or 24.12 
cents per 60-foot-car mile, for additional credit by the Government 
for dead space. (Fiscal year 1910.) 

Tiie Department further estimated that as of November, 1913, 
including in car miles 40 per cent of the return movement of empty 
storage cars, the average revenue for mail would be 24.56 cents. If 
including 75 per cent of the return movement of empty storage cars, 
it would be 23.97 cents. If including 75 per cent of the return move- 
ment of empty storage cars and based on three car units, namely, 60, 
30, and 15 feet, it would be 21.31 cents. The revenue used in each of 
these cases was that of November, 1913, $55,410,775. (Letter of 
May 2, 1914.) 

Mr. Lorenz, in a memorandum submitted to the committee, gave 
the Pullman revenue of the railroads as 23.2, but disclaimed respon- 
sibility for the accuracy of this estimate on account of dearth of proper 
statistics. For passenger, five years' average, he gave a figure of 
25.30 cents; for mail, 20.22 cents; and in a separate memorandum 
he stated the express revenue to be 22.80 cents. 

Mr. Bradley, in a memorandum submitted to the committee, esti- 
mated that the revenue to the railroads from Pullman service is 
22.50 cents, based on 1.974 cents as the average passenger rate. If, 
however, the Pullman passenger pays 2.25 cents per mile, the average 
revenue would be 25.65 cents. If the railroads are relieved of the 
Pullman operathig expense per car mile, estimated to be 4.14 cents, 
the estimated revenue would be 29.79 cents. For passenger, on a 
60-foot car-mile basis, he gives a car-mile revenue of 26.52; for mail, 
19.38 cents; and for express, 23.16 cents. 

Under date of May 18 the Second Assistant Postmaster General's 
attention was called to his estimate, printed on page 1279 of the 
hearings, that the express revenue for 1910 was 21.37668 cents per 
car mile, and he was requested by the chairman to have the tabula- 
tions by which this figure was reached checked. On May 28, 1914, 
the Second Assistant Postmaster General replied that the rate should 
be corrected to read 22.647 cents, which approximately agrees with 
the rate ascertained by Mr. Lorenz, namel}', 22.80 cents, the differ- 
ence perhaps being accounted for by the fact that Mr. Lorenz, in his 



58 KAILWAY MAIL PAY. 

calculation eliminated the revenue and car miles of roads less tlian 
100 miles in length. The department also gave a figure of 23.088 
cents for November, 1909. With reference to this figure, Mr. 
Stewart, in his letter of May 28, 1914, says: 

Your further request that the express revenue reported to the department by 
the railroads for the month of November, 1909, be totaled, together with the corre- 
sponding car-foot miles and car miles, is noted. In compliance therewith, results 
have been ascertained as follows: 

Total car-foot miles in express service 1, 301, 503, 075 

Total express revenue $5, 009, 337 

Express revenue per car-foot mile mills. . 3. 848 

(Figures do not include data for the Long Island H. K.) 

Owing to the fact that the items of express revenue composing the above total 
revenue have not been examined, checked, nor published in House Document 105, 
the department is not prepared to vouch for the accuracy of the rate per car-foot mile 
based thereon, namely, 3.848 mills. 

Throughout this inquiry where requests for information were made 
of the Post Office Department, similar requests were made of the 
railroads in order that data secured from the one might serve as a 
check on or verification of that furnished by the other. We have 
exhausted every possible effort to secure information of a demon- 
strable nature. On account of the extreme technicality of the sub- 
ject matter which we have had under consideration we have met 
with many obstacles in our efforts to reach this desirable end ; hence 
delays have resulted awaiting verification of statements submitted, 
the correctness of which we were unwilling to accept without such 
verification. Our aim, as already indicated, has been to present 
facts to Congress and not estimates. 

We take pleasure in expressing our appreciation and recognition 
of the able and valuable assistance rendered our committee by its 
secretary, Mr. Robert H. Turner, in our preparation of this chapter 
of our report. 



CHAPTER III. 

THE WEIGHT BASIS, ITS DEFECTS— THE SPACE BASIS. 

In the foregoing chapter is presented a historical review of previous 
investigations of the subject of railway mail pay, and a resume of 
the testimony and arguments submitted in this inquiry. Some of 
the statistics will be presented more in detail in succeeding pages, 
and the merits of different plans suggested will be discussed. Pre- 
liminary thereto we submit the following brief summary of laws 
enacted upon this subject, begiiming with the act of 1873, which is 
the basis of the present system of railway mail compensation: 

The act of March 3, 1873, authorized and directed the Postmaster 
General to readjust railway mail compensation on the basis of a rate 
per mile per annum according to the average daily weight carried 
on each route, the weight being determined by a weighing of the 
mails for not less than 30 successive working days, and at least once 
in every four years. The rates are stated in the following table: 

Rates allowable 
under act of 
Average weight of mails per day carried over whole length of route: Mar. 3, 1873. 

200 pounds t $50 

500 pounds 75 

1,000 pounds 100 

1,500 pounds 125 

2,000 pounds 150 

3,500 pounds 175 

5,000 pounds 200 

For each additional 2,000 above 5,000 and less than 48,000 pounds. 25 

For each additional 2,000 pounds in excess of 48,000 pounds 25 

The same act provided that additional pay should be allowed for a 
daily trip of a full railway post-office car 40 feet or more in length at 
the following rates per mile per annum: 

40-foot car $25 

45-foot car 30 

50-foot car , 40 

55 to 60 foot car (or more) 50 

The act of July 12, 1876, made a flat reduction of 10 per cent in each 
of the weight rates. The same act provided that land-grant railroads 
shall be paid only 80 per cent of the regular rates. 

The act of June 17, 1878, made a further reduction of 5 per cent in 
the weight rates. 

The act of March 3, 1905, required that the mails should be weighed 
for not less than 90 successive working days instead of for 30 days, as 
required by the law of 1873. 

The act of March 2, 1907, made a further reduction of 5 per cent in 
the weight rates on routes carrying a daily average of over 5,000 
pounds and a reduction of 10 per cent in the rates on routes carrying a 
daily average of over 48,000 pounds. 

59 



60 



RAILWAY MAIL PAY. 



The same act made reductions in the rates to be paid for E,. P. O. 
car service, the new rates per mile per annum being: 

40-foot car : $25. 00 

45-foot car 27. 50 

50-foot car 32. 50 

55 to 60 foot car or more 40. 00 

On June 7, 1907, Postmaster General Meyer issued Order No. 412, 
changing the method of computing the average daily weight of mail 
carried. Although this was not a change in the law, it is mentioned 
here because it was a change in the interpretation of law which had 
the effect of reducing the pay of the railroads about $5,000,000 per 
annum. The divisor order is described on pages 44-45 and 117,118. 

The act of May 12, 1910, reduced the rate. for land-grant routes on 
each 2,000 pounds in excess of 48,000 pounds from $17.10 to $15.39. 

The act of August 24, 1912, authorized the Postmaster General to 
readjust pay if mail be diverted from one route to another to the 
extent of not less than 10 per cent of the weight on either route. 

PRESENT WEIGHT RATES. 

The annual rates now in force are as follows : 



Average weight of mails per day carried over whole length of route. 



To non- 
land-grant 
railroads 
per mile 
per annum. 



To land- 
grant rail- 
roads per 
mile per 
annum. 



Intermedi- 
ate weights 
for which 
additional 
allowance 
is paid at 
the rates 
stated in 
note 1. 



■200 pounds 

200 to 500 pounds 

500 pounds 

500 to 1,000 pounds 

1,000 pounds 

1,000 to 1,500 pounds 

1 ,500 pounds 

1,500 to 2,000 pounds 

2,000 pounds 

2,000 to 3,500 pounds 

3,500 pounds 

3,500 to 5 ,000 pounds 

5 ,000 poiinds 

For each additional 2,000 pounds above 5,000 and less than 48,000 

pounds 

Above 5,000 and less than 48,000 pounds 

For each additional 2,000 pounds in excess of 48,000 pounds 



$42. 75 



$34.20 



Pounds. 



12 



64. 12 
'85.50" 



51.30 
'68.'46' 



106.87 
"128." 25' 



85.50 

'io2.m' 



149. 62 

'in.' 66" 

20. 30+ 
"i9.'24" 



119. 70 
"i36.'86"" 
16.24+ 
""i5.'39"' 



20 
'26 
'26 
"60 
'66 



80 



NoTK 1. — For each additional number of pounds weight indicated in the third column there is paid to 
nonland-grant roads 85 cents per mile per annum and to land-grant roads 68+ cents per mile per aimum, 
except that on routes carrying from 5,000 to 48,000 pounds the additional allowance is 81 cents per mile per 
annum to nonland-grant roads and 64 cents per mile per annum to land-grant roads. 

PRESENT RAILWAY POST-OFFICE-CAR RATES. 



The rates paid for use and for part of the transportation cost of 
railway post-ofhce cars per mile per annum are as follows per round 
trip daily: 

Hallway post-office cars 40 feet in length, inside measurement $25. 00 

Railway post-office cars 45 feet in length, inside measurement 27. 50 

Railway post-office cars 50 feet in length, inside measurement 32. 50 

Railway post-office cars 55 feet in length, inside measurement 40. 00 



EAILWAY MAIL PAY. 



61 



COMPARISON OF AUDITED REVENUES AND EXPENDITURES. 

The following table shows the total postal revenue, the total postal 
expenditure, and the expenditure for railroad transportation and 
railway post-office cars combined, 1879 to 1913, inclusive: 



Fiscal year. 



Audited 
revenues. 



Per cent 
of 

increase 

as com- 
pared 
with 

previous 
fiscal 
year. 



Audited postal 
expenditures. 



Annual ex- 
penditure for 
railroad trans- 
portation and 
R. P. O. cars.i 



Increase. 



Per 
cent. 



1879. 
1880. 
1881. 
1882. 
1883. 
1884. 
1885. 
1886. 
1887. 
1888. 
1889- 
1890. 
1891. 
1892. 
1893. 
1894. 
1895. 
1896. 
1897. 
1898. 
1899. 
1900- 
1901. 
1902. 
1903- 
1904. 
1905. 
1906- 
1907- 
1908- 
1909- 
1910. 
1911- 
1912- 
1913. 



33, 

36, 

41, 

45, 

43, 

42, 

43, 

48, 

52, 

56, 

60, 

65, 

70, 

75, 

75, 

76, 

82, 

82, 

89, 

95, 

102, 

111, 

121, 

134, 

143, 

152, 

167, 

183, 

191, 

203, 

224, 

237, 

246, 

266, 



041,982.86 
315, 479. 34 
785, 397. 97 

876. 410. 15 

508. 692. 61 
325, 958. 81 
560,843.83 
948, 422. 95 

837. 609. 39 
695, 176. 79 
175,611.18 
882, 097. 92 
931,785.72 
930,475.98 

896. 933. 16 
080,479.04 
983, 128. 19 

499. 208. 40 
665, 462. 73 
012, 618. 55 
021,384.17 
354,579.29 
631,193.39 
848, 047. 26 
224, 443. 24 
582, 624. 34 
826, 585. 10 
932, 782. 95 
585, 005. 57 

478. 663. 41 
562,383.07 

128. 657. 62 
879, 823. 60 
744,015.88 
619, 525. 65 



2.61 

10.89 

10.41 

13.84 

8.67 

2 4.80 

2 1.77 

3.26 

11.12 

7.90 

6.60 

8.31 

8.21 

7.58 

7.00 

2 1.08 

2.53 

7.17 

.20 

7.68 

6.75 

7.72 

9.06 

9.15 

10.16 

6.97 

6.44 

9.88 

9.32 

4.30 

6.31 

10.10 

6.14 

3.72 

8.05 



$33, 449, 

36, 542, 

39, 592, 

40,482, 

43, 282, 

47,224, 

50,046, 

51,004, 

53, 006, 

56,468, 

62,317, 

66, 259, 

73, 059, 

76,980, 

81,581, 

84, 994, 

87, 179, 

90,932, 

94,077, 

98, 033, 

101,632, 

107, 740, 

115,554, 

124, 785, 

138, 784, 

152, 362, 

167, 399, 

178, 449, 

190,238, 

208, 351, 

221,004, 

229, 977, 

237, 648, 

248, 525, 

262, 067, 



899. 45 
803. 68 
566. 22 
021.23 
944. 43 

560. 27 
235.21 
743. 80 
194. 39 
315. 20 
119. 36 
547. 84 

519. 49 
846. 16 
681.33 
111.62 

551. 28 

669. 50 
242. 38 
523.61 
160. 92 
267. 99 
920. 87 

697. 07 
487. 97 
116. 70 
169.23 
778. 89 
288.34 
886. 15 
102. 89 
224. 50 
926. 68 

450. 08 
541.33 



$9, 567, 589. 00 
10,498,986.00 
11,613,368.00 
12,753,184.00 
13,887,800.00 
15,012,603.00 
16,627,983.00 
17, 336, 512. 00 
18,056,271.72 

19. 524. 959. 15 
21,639,613.33 
23,395,231.66 
25,183,713.82 
27, 126, 529. 11 
28,910,195.30 
30,358,190.01 
31,205,342.58 
32, 405, 797. 17 
33, 876, 521. 19 
34, 703, 847. 56 
36, 117, 875. 74 
37,793,981.74 
38, 519, 624. 27 
39, 953, 607. 95 
41, 886, 848. 59 
44, 695, 610. 36 

45. 576. 515. 16 
47,481,037.56 
51,008,111.32 
49, 404, 763. 05 
49, 606, 440. 16 
49,302,217.46 
50,910,261.68 
50,703,323.02 
51, 466, 030. 62 



$931,397.00 
1,114,382.00 
1,139,816.00 
1,134,616.00 
1, 124, 803. 00 
1,615,380.00 

708, 529. 00 

719, 759. 72 
1,468,687.43 
2,114,654.18 
1, 755, 618. 33 
1, 788, 482. 16 
1,942,815.29 
1,783,666.19 
1, 447, 994. 71 

847, 152. 57 
1,200,454.59 
1,470,724.02 

827,326.37 
1, 414, 028. 18 
1, 676, 106. 00 

725, 642. 53 
1,433,983.68 
1,933,240.64 
2, 808, 761. 77 

880,904.80 

1,904,522.40 

3, 527, 073. 76 

21,603,348.27 

201,677.11 

2 304,222.70 

1,608,044.22 

2206,938.66 

762, 707. 60 



9.73 

10.61 
9.81 
8.89 
8.09 

10.76 
4.26 
4.15 
8.13 

10.83 
8.11 
7.64 
7.71 
6.57 
5.00 
2.79 
3.84 
4.53 
2.44 
4.08 
4.64 
1.92 
3.72 
4.84 
6.70 
1.97 
4.17 
7.42 

2 3.24 
.41 
2.61 
3.26 
2.40 
1.50 



1914 appropriation s $57, 000, 000 

1915 appropriation * 62, 110, 000 

1 It will be noted that the figures in this column are not identical with the figures taken from Interstate 
Commerce Commission reports and presented on page 94. The difference is apparently due to the fact 
that the Post Office Departments' reports cover all audited expenditures under this item while the Inter- 
state Commerce Commission reports cover only mail revenues reported to the commission by the railroads. 
Some railroads make incomplete or defective reports. 

2 Decrease. 

3 Includes $500,000 for transportation of supplies by freight and express. 
* Includes $510,000 for transportation of supplies by freight and express. 



DEFECTS OF PRESENT SYSTEM. 

The problem of fixing compensation for the transportation of mail 
by the railroads is one that has perplexed the minds of legislators 
almost from the beginning of railroad transportation. It is a prob- 
lem no less difficult than that of determining fair and equitable rates 
for the transportation of freight or passengers. In fact, in some 
respects it is much more difficult, for the reason that mail has no 
determinable commercial value and it is impossible therefore to 
determine what rate the traffic will bear, as sometimes is done in the 
case of the transportation of commodities. The problem of fixing 



62 RAILWAY MAIL PAY. 

compensation for transportation of the mail involves all the diffi- 
culties that are encountered in considering the question of transpor- 
tation of commodities or passengers, and also presents the difficulty 
incident to the transportation of something that is of incalculable 
value, and yet having no commercial value in the ordinary sense of 
the term. It is not surprising, therefore, that during all the years 
of uncertainty regarding a proper basis for the fixing of rates for 
freight and passengers the intermittent efforts of Members of Con- 
gress and of the Post Office Department to work out a satisfactory 
plan for compensating railroads for mail transportation have proven 
futile. 

It may safely be asserted that the present method of computing 
the compensation is so complicated and so difficult to understand 
that a business man of average ability and business experience could 
not read the existing laws and then compute the amount that should 
be paid any read. It is not pretended that the above brief statement 
is a full and exact explanation of the present system of compensation. 

We believe that its intricacy and complexity alone is sufficient to 
condemn the present system. We assert that whenever practicable all 
transportation rates, whether for freight, passengers, express, or mail, 
should be stated in terms so plain that the average citizen may know 
the unit of service, the rate payable, and be able therefrom to com- 
pute the total amount due. 

But the present system has other defects which may be thus con- 
cisely stated : 

Quadrennial weighings are an unsatisfactory basis, because they 
make no allowance for changes in quantity of mail during the four- 
year periods. 

Should the mail diminish between quadrennial weighing periods, 
the Government would have to pay for service not performed; and if 
it increased, the railroads would receive no compensation for trans- 
porting the increased volume of mail. This is manifestly unjust and 
unbusinesslike. 

Quadrennial weighings cost the Government an average of about 
$400,000 per year and entail a considerable expense upon the rail- 
roads in checking Government weights in order to guard against 
mistakes. 

Compensation for four years on the basis of a 90-day weighing 
period is wrong in principle as it creates opportunity for the railroads 
to pad the mails or the Post Office Department to deplete them during 
such a weighing period. 

The present system requires the railroads to carry the mails between 
the depot and the post office in most instances, but relieves them of 
that burden in many instances. Conveyance of mail on city streets 
is no proper part of railroad duty. Railroad transportation, both 
freight and passenger, begins and ends at railroad depots and 
terminals. 

The present system pays the same rate per ton-mile whether the 
haul is long or short; yet terminal expenses are relatively the same 
regardless of the length of the haul, thus creating an inequality be- 
tween the short lines and trunk lines, although the present system 
attempts to counteract this by paying a different rate for different 
densities of traffic. 

The present system ignores the frequency of service — pays the same 
rate for mail carried on one train as for the same daily average weight 



KAILWAY MAIL PAY. 63 

carried on two or more trains, though the latter service is more 
expensive to the railroads and more valuable to the public. 

Compensation based chiefly upon weight does not provide sufficient 
incentive to the Government to economize in the space used in cars, 
thus encouraging economic waste. 

For the reasons above stated, we believe the weight basis for fixing 
railway mail pay involves so many defects that it should be abandoned 
if a better system can be devised. 

SPACE AS A SUBSTITUTE FOR WEIGHT. 

This brings us to a consideration of the space basis as a substitute 
for the present system. 

While one's first impression is that weight is the chief factor in 
determining all transportation costs and charges, a raore careful 
consideration of the subject will show that this is not the case. 

The bulk of the freight business is carried in what are known as 
carload lots. In the carload freight business, space is taken into 
consideration in that a minimum weight per car, varying with the 
bulk of the commodity, is fixed, and the shipper must pay at least 
the minimum carload rate regardless of the amount of freight in the 
car. In fixing rates upon different commodities shipped in less than 
carload lots, the bulk of the commodity as well as its weight receives 
consideration. For example, a carriage or furniture that is taken 
apart and packed into a crate will be transported at a less charge 
than the same article shipped set up. The reason for the difference, 
although the weight be identical, is that in one instance less space 
is occupied than in the other. 

The same principle obtains, in general, in fixing passenger rates. 
The charge is so much per passenger, whether the passenger be a 
heavy man or a light man. The same is true in the fixing of Pull- 
man fares. A certain amount is charged for the use of a berth 
whether it be occupied by one or two persons. 

The justification for this consideration of space in fixing transpor- 
tation charges in the passenger service is that the car itself weighs 
more than its contents. This is also true in the case of mail. A 
storage car contains the largest quantity of mail which it is possible 
to ship in one conveyance. Yet, the steel storage car weighs about 
50 tons while the mail it carries usually would not exceed 10 tons. 
In the ordinary post-oflfice car, however, so much of the space is 
used for the distribution of mail that on an average only 2 to 3 
tons of mail matter is carried, while the car itself, if of steel, weighs 
some 60 tons. 

It will readily be seen, therefore", that if the railroad company is 
required to haul 60 tons of car and only 2 to 3 tons of mail therein, 
the chief source of expense is in the transportation of the car, not in 
the transportation of its contents. If the Government, for the pur- 
pose of facilitating the rapid distribution of mail, chooses to load 
a car with only 2 to 3 tons of mail, it should pay the railroad on a 
basis that will afford a reasonable compensation for the hauling of 
both car and contents. 

Heretofore the railroads have received their compensation in two 
classes— first, for the transportation of a certain quantity of mail 
ascertained by weight; and, second, a charge for space in and haulage 
of railway post-office cars 40 feet or more in length utilized for mail 



64 KAILWAY MAIL PAY. 

distribution in transit. This is an express recognition of the right 
of the raihoads to compensation for hauUng the working space. We 
are akeady on a partial space basis. 

It is to the interest of the Government, however, to &k. the com- 
pensation on such a basis as will encourage the department and its 
employees to utilize all the space it is practicable for them to use. 
Naturally, it will be the desire of the department to make as good a 
record as possible for economical management. If the entire com- 
pensation be based upon a standard of space, the supervisory officials 
m the department will encourage and require their employees to 
utiUze that space as fully and economically as possible. The judicious 
expenditure of pubhc money will thus be encouraged and economic 
waste minimized. 

ADVANTAGES OF SPACE BASIS. 

We favor the adoption of space rather than weight as the basis 
for measuring the service rendered, for the following reasons: 

It permits fluctuation of mail pay with every material fluctuation 
in the service. 

It ehminates the cost and inconvenience of the quadrennial weighing. 

It eliminates the temptation for dishonest efforts to either deplete 
or pad mails during the weighing periods, because it abolishes all 
weighing. 

It minimizes waste by encouraging the Post Office Department 
to utiUze as nearly as possible all the space it pays for in mail cars. 

It constitutes a system of compensation so definite, simple, and 
clear that any citizen can understand it and can know exactly what 
service each railroad is rendering, its rate of pay, and the amount of 
annual compensation. 

Rapid development of the parcel-post service furnishes another 
strong reason for the substitution of space for weight as a basis of 
railway mail compensation. Since expansion of the parcel post, 
the quadrennial weighing has become much more unsatisfactorjr as 
a means of determining the compensation to be paid for transportation. 

As already indicated, the idea of adopting space as the basis 
for railway mail pay is not new. The subject was presented at 
length before the Hubbard Commission in 1876, before the Elmer- 
Thompson-Slater Commission in 1883, and before the Wolcott-Loud 
Commission in 1898. The former two commissions favored the 
space basis and, from expressions heretofore quoted, it seems prob- 
able that the Wolcott-Loud Commission would have reached a 
similar conclusion if it had pursued the subject more extensively. 
The Hitchcock plan, in Document 105, was based upon space, but 
was so defective in other respects that the department itself found 
it advisable to abandon it. 

Although the Post Office Department failed to evolve any prac- 
tical, administrable space plan and the railroads have almost unani- 
mously opposed the space basis, yet we feel that we have constructed 
a scientific, simple, and most desirable space plan as presented in 
our suggested bill, and are confident that the adoption and oper- 
ation of same wiU prove highly satisfactory to both the Government 
and the railroads, certainly far more satisfactory than our present 
system. 



CHAPTER IV. 

THE DEPARTMENT'S CLAIM THAT RAILROADS ARE OVERPAID 
FOR CARRYING MAIL— ITS FOUR SUGGESTED PLANS. 

The act of March 3, 1879, chapter 180, section 6 (20 Stat. L., 358), 
provides as follows : 

The Postmaster General shall request all railroad companies transporting the mails 
to furnish under seal, such data relating to the operating, receipts, and expenditures 
of such roads as may, in his judgment, be deemed necessary to enable him to ascer- 
tain the cost of mail transportation and the proper compensation to be paid for the 
same; and he shall, in his annual report to Congress, make such recommendations, 
founded on the' information obtained under this section, as shall, in his opinion, be 
just and equitable. 

Soon after the passage of this act an effort was made to secure the 
information required, but at that time the railroad companies did not 
have their accounts in such shape as to enable them to make reports 
which the department needed for the purposes required. 

In 1907 Mr. Cortelyou, then Postmaster General, evidently believing 
that railroad accounting had been so developed that reliable data 
could be secured upon which to base conclusions in compliance with 
the act above quoted, had a special committee created in the Post 
Office Department itself under the direction of the Second Assistant 
Postmaster General. Over 140 questions were prepared and pro- 
pounded to the 795 steam railroads then carrying mail to ascertain 
and furnish the Post Office Department the information requested 
for the month of November, 1909. 

ORIGINAL HITCHCOCK PLAN. 

At the request of the department Congress made two appropria- 
tions of 110,000 each to defray the expenses of the tabulation of 
these returns. Out of this aggregate of $20,000 appropriated, 
$19,423.20 was expended, the railroads claiming that it cost them 
over $250,000 to secure the information asked for by the department. 

There was submitted to Congress on August 12, 1911, by the then 
Postmaster General Hitchcock, the result of such investigation of the 
cost to railroads of transporting mail. This was published in House 
Document No. 105, 1911, Sixty-second Congress, first session, and 
has been much discussed in the hearings before our joint committee. 
Said House Document No. 105 contains a tentative draft of proposed 
law for regulation of railway mail pay, same reading as foUows: 

TENTATIVE DRAFT OF PROPOSED LAW FOR REGULATION OF RAILWAY MAIL PAY. 

The Postmaster General is authorized and directed to require companies operating 
railroads by steam, electricity, or other motive power carrying the mails to furnish 
under oath and seal not less frequently than once in each fiscal year such information 
relating to the service, operation, receipts, and expenditures of such roads for a period 
of not less than thirty days, to be designated by him, as may in his judgment be 
deemed necessary to enable him to ascertain the cost to the companies of carrying 

56211—14 5 65 



66 RAILWAY MAIL PAY. 

the mails on their respective roads and the proper compensation to be paid for that 
service. He shall require all such companies to submit such information not later than 
March first, nineteen hundred and twelve, and in each fiscal year thereafter at such 
times and for such periods as he shall prescribe. It shall be the duty of such railroad 
companies to furnish such information, and if any railroad company fails or refuses to 
do so when required, its compensation for service rendered thereafter until such com- 
pany shall comply and an adjustment is made by the Postmaster General, shall be 
forfeited to the United States and shall be withheld as liquidated damages. 

If any officer, agent, or employee of a railroad company shall knowingly furnish 
uny information required under the provisions of this act that is false and fraudulent, 
lie shall be fined not more than twenty thousand dollars and imprisoned not more 
than five years. 

The Postmaster General shall determine the cost to each railroad company of 
carrying the mails on its respective road or roads, and shall verify and state the result 
in such form and manner as he shall deem proper. For this purpose he is authorized 
to credit, assign, and apportion the revenues and expenses of railroad companies 
so reported in such manner as he shall deem fair and equitable and in his judgment 
necessary to ascertain the cost as near as practicable, a statement of which shall be 
given the company concerned. If any railroad company shall object to the method 
of crediting, assigning, and apportioning the revenues and expenses, it may file 
objection with the Postmaster General within twenty days after such statement 
is made to the company, and the Postmaster General shall thereupon certify the method 
and objection, and such papers as in his judgment may be essential to an understand- 
ing of the method, to the Interstate Commerce Commission, who shall review the 
finding of the Postmaster General and affirm, modify, or revise the same, and certify 
the result to the Postmaster General, which action thereon shall be final. 

The Postmaster General is authorized and directed to readjust the pay to companies 
operating railroads for the transportation and handling of the mails and furnishing 
facilities in connection therewith, not less frequently than once in each fiscal year, 
commencing with July first, nineteen hundred and twelve, at a rate of compensation 
per annum not exceeding the cost to the railroad companies of carrying the mails 
as ascertained by him, and six per centum of such cost: Provided, That when such 
ascertained cost and six per centum does not equal twenty-five dollars per mile per 
annum, he may, in his discretion, allow not exceeding such rate. 

Railroad companies whose railroads were constructed in whole or in part by a 
land grant made by Congress on the condition that the mails should be transported 
over their roads at such price as Congress should by law direct, shall receive not 
exceeding the cost to them of performing the service. 

Information shall be furnished and adjustments made as near as practicable by 
accounting systems or roads, and the cost and the compensation for the term shall be 
stated for all service covered by each system or road. The routes for a system or 
road may be stated for administrative purposes in such manner as the Postmaster 
General may determine. 

The Postmaster General may order new or additional service during a term for 
which an adjustment shall have been made or service authorized on any system or 
road, in any train operated by such system or road over any part of the trackage 
included in the adjustment or authorization, and without additional compensation 
therefor during such term. 

He may order service over new or additional trackage of an adjusted system 
©r road during a term and state the amount performed for the remainder of such 
term on statistics obtained for the first thirty days of service. Payment therefor 
may be made at not exceeding the average rate per car-foot mile for the system 
®r road ascertained at the regular adjustment. Entire discontinuance of service 
®ver trackage included in the adjustment or thereafter added shall be deducted 
jfe)r at the car-foot mile rate of adjustment or mile rate of authorization. In case 
the operation of service over trackage included in an adjustment or thereafter added 
h undertaken by another company during the term, the same may be recognized 
by the Postmaster General, provided the companies in interest shall file with him 
their joint agreement as to the part of the compensation of the old operating company 
to be paid the new operating company; otherwise payment to the company first 
authorized shall be full payment for all service performed for the term. 

The Postmaster General may order service over trackage of a railroad company 
not operating service under an adjustment or authorization after the regular adjust- 
ment for the remainder of the term, and pay therefor at not exceeding forty- two 
dollars and seventy-five cents per mile of trackage per annum. 

Service over property owned or controlled by a terminal company shall be con- 
sidered service of the roads or systems using such property and not that of the terminal 
company. 



RAILWAY MAIL PAY. 67 

Railroad companies carrying the mails shall furnish all necessary facilities for 
caring for and handling them while in their custody. They shall furnish all cars 
or parts of cars used in the transportation and distribution of the mails, and place 
them in stations before the departure of trains when required to do so. They shall 
provide side, terminal, and direct transfer service and all station and depot space 
and rooms for handling, distribution, and transfer of mails en route, and for offices 
and rooms for the employees of the Postal Service engaged in such transportation, 
when ordered by the Postmaster General. 

Every railroad company carrying the mails shall carry on any train it operates 
and without extra charge therefor the persons in charge of the mails, and when on 
duty and traveling to and from duty, and all duly accredited agents and officers of 
the Post Office Department and the Postal Service, while traveling on official business, 
upon the exhibition of their credentials. 

All cars or parts of cars used for the Railway Mail Service shall be of such con- 
struction, style, length, and character, and furnished in such manner as shall be 
required by the Postmaster General, and shall be constructed, fitted up, maintained, 
heated, lighted, and cleaned by and at the expense of the railroad companies. No 
payment shall be made for service by any railway post-office car which is not sound 
in material and construction, and which is not equipped with sanitary drinking- 
water containers and toilet facilities, nor unless such car is regularly and thoroughly 
cleaned. No pay for service shall be allowed for the operation of any wooden railway 
post-office car unless constructed substantially in accordance with the most approved 
plans and specifications of the Post Office Department for such type of cars, nor for 
any wooden railway post-office car run in any train between adjoining steel or steel 
underframe cars, or between the engine and steel or steel underframe car adjoining. 
All additional cars accepted for this service shall be of steel or with steel underframe 
if used in a train in which a majority of the cars are of steel or steel underframe. After 
the first of July, nineteen hundred and sixteen, the Postmaster General sha]l not ap- 
prove or allow to be used or pay for the use of any railway post-office car not con- 
structed of steel or with steel underframe, if such car is used in a train in which a 
majority of the cars are of steel or of steel underframe construction. The Postmaster 
General shall make deductions from the pay of the railroad companies on the basis of 
the value of the service comi>uted on the car-foot mile basis in all cases where the 
cars do not comply with the provisions of this act. 

The space in cars devoted to the use of the mails, as ascertained during the period 
fixed by the Postmaster General for the rendition of information by the railroad com- 
panies, shall be taken as the basis for computing the car-foot miles devoted to the 
mail service for the purpose of readjustment, effective from the first of July next 
following: Provided, That no credit shall be given for space in cars devoted to the 
distribution of the mails unless such space shall be authorized by the postmaster 
General or unless he shall determine that its use is made necessary by a specific au- 
thorization . 

If any railroad company shall fail or refuse to provide cars or apartments in cars 
for distribution purposes when required by the Postmaster General, or shall fail 
or refuse to construct, fit up, maintain, heat, light, and clean such cars and provide 
such appliances for use in case of accident as may be required by the Postmaster 
General, it shall be fined such sum as shall, in the discretion of the Postmaster Gen- 
eral, be deemed proper. 

The Postmaster General shall in all cases decide upon what trains and in what man- 
ner the mails shall be conveyed. Every railroad company carrying the mails shall 
carry on any train it operates all mailable matter directed to be carried thereon. 
If any railroad company shall fail or refuse to transport the mails when required by 
the Postmaster General upon any train or trains it operates, such company shall be 
fined such amount as may, in the discretion of the Postmaster General, be deemed 
proper. 

The Postmaster General may make deductions from the pay of railroad companies 
carrying the mails under the provisions of this act for reduction in service or frequency 
of service where, in his judgment, the importance of the facilities withdrawn or re- 
duced requires it and impose fines upon them for delinquencies. He may deduct 
the price of the value of the service in such cases where it is not performed, and not 
exceeding three times its value if the failure be occasioned by the fault of the rail- 
road company. 

The Postmaster General is authorized to have such weights of mails and measure- 
ments of space taken and to collect such other information by sworn employees of 
the Post Office Department as he may deem necessary and to have such information 
stated and verified to him by such employees, under such instructions as he may 
consider just to the Post Office Department and the railroad companies, to assist in 
the ascertainment of the space used for the transportation and the handling of the 



68 RAILWAY MAIL PAY. 

mails on railroads, and to employ such special clerical and other assistance as shall be 
necessary to carry out the provisions of this act, and to rent quarters in Washington, 
District of Columbia, if necessary, for the clerical force engaged thereon, and to pay 
for the same out of the appropriation for inland transportation by railroads. 

The provisions of this act shall apply to service operated by railroad companies 
partly by railroad and partly by steamboats. 

The provisions of this act respecting the rate of compensation and the determina- 
tion thereof shall not apply to mails conveyed under special arrangement in freight 
trains, for which a rate not exceeding the usual and just freight rates may be paid, 
in accordance with the classifications and tariffs approved by the Interstate Com- 
merce Commission. 

It shall be unlawful for any railroad company to refuse to carry the mails at the 
rates of compensation provided by law when and for the period required by the Post- 
master General so to do, and for every such offense it shall be fined not exceeding 
$5,000. 

All laws or parts of laws inconsistent herewith are hereby repealed. 

CAPITAL CHARGES DISREGARDED. 

Mr. Hitchcock strongly recommended to Congress the enactment 
of this bill, conveying to Congress by letter the impression that the 
result of such legislation would be a saving to the Government of 
about $9,000,000 in railway mail pay. This statement attracted a 
great deal of attention, and tended to confirm the widespread popular 
impression that the mail payments to steam raikoads b}^ the Gov- 
ernment were and are excessive. Evidently Mr. Hitchcock and his 
departmental committee studying this problem, failed to realize that 
rights of way, roadbeds, tracks, equipment, and terminals were 
necessary prerequisites in the operation of mail cars, as no allowance 
whatever was m-ade in the suggested method of payment for capital 
charges, but the sole compensation to the railroads should be the 
Postmaster General's ascertained cost to the railroad companies for 
carrying the mail and 6 per cent of said cost. 

The bill was referred to the Senate Committee on Post Offices and 
Post Roads. The Post OflSlce Department urged its inclusion in the 
Post Office appropriation bill, then under consideration by the Senate 
committee. The Senate committee thought best, because of the 
technicality and importance of the subject and the shortness of time 
remaining before the adjournment of Congress, to leave the matter for 
later consideration, and recommended the appointment of a joint 
committee for a special study of the subject of compensation for 
the transportation of mail as well as postage on second-class mail 
matter. Congress acted in accordance with the suggestion of that 
committee, mth the result that our committee was created. 

DISCUSSION OF PLAN INVITED. 

For the purpose of getting the department's views before the coun- 
try and enabling Congress to get all possible information bearing on 
the subject matter, the Senate Committee on Post Offices and Post 
Roads requested its then chairman, Jonathan Bourne^ jr., to intro- 
duce the departmental suggested draft of a bill in the Senate, and 
Chairman Bourne sent a copy of same to each one of the railroads 
with a letter requesting their comments, criticisms, and suggestions 
relative to the tentative departmental plan. 

The railroad representatives vigorously assailed the soundness and 
justice of the conclusions announced by the department in Document 



KAIL WAY MAIL PAY. 69 

No. 105 and as embodied in the department's suggested plan. 
They held that the allowance should not be calculated upon the 
operating expenses, but upon the mail service's share of the capital 
charges. They further claim. ed that the department had made seri- 
ous statistical errors in its method of tabulation regarding space 
occupied on trains. The purpose of the tabulation was to show the 
relative space occupied on passenger trains by the passenger, mail, 
and express services, respectively. The railroads included in this 
space to be charged to mail all the space actually run in connection 
with that service, irrespective of whether it was loaded or empty. 

In the mail service, as in other branches of the railroad service, 
traffic is not evenly balanced in both directions. Cars well fiUed in 
one direction must be brought back empty. The department, in 
tabulating the space returns, segregated a large part of this empty 
space. This was of various classes, but all classes of dead space were 
put together in one column, and in some tables consolidated with the 
passenger space. In making its deductions from the result of the 
tabulation, the department did not consider the ^^dead" or ^^ empty" 
mail space as mail space except to a slight extent, in which case they 
called it ^^ deadhead" space. This error was not expressly admitted 
by the department, and much time was consumed in the hearings in 
the discussion of this question of ^'dead space." 

The admission of this error would absolutely overthrow the only 
basis upon which the department could claim that on a commercial 
basis the railroads were overpaid. 

ERRONEOUS TREATMENT OF MAIL SPACE. 

To our minds, the discussion of this subject, which the reader who 
is interested may pursue extensively in the printed hearings, proved 
conclusively that here also the department made a serious error. 
Some of the so-called dead space may have been legitimately rejected, 
as when a particular train running six times a week was erroneously 
put down as running seven times a week. But to maintain that 
empty space unavoidably run in connection with the mail service 
is not to be considered as chargeable to the department, when the 
empty seats in the passenger car are all charged to the passenger 
service, must appeal to any fair-minded person of average intelli- 
gence as utterly unwarranted. To be sure, one may make rates to 
be paid for loaded cars only, but then the rates must be kept high 
enough to include a payment for the average amount of necessary 
empty movement. We may illustrate the effect of rejecting the 
dead space in making comparison of earnings in the mail service and 
other passenger-train service as follows: It is undisputed that when 
''dead space" is all charged to the mail service, the Government 
paid 20.22 cents per car mile in November, 1909, while if it is not 
counted it paid 24.84 cents per car mile. If in the other passenger- 
train services all the space is counted, which is the only way it can 
be counted from the evidence submitted, it has been agreed by 
representatives of both the department and the railroads that the 
railroads received a car-mile rate of 26.04 cents in that month. It 
is indisputable that the 26.04 cents passenger-car-mile revenue must 
be compared with the 20.22 cents for mail and not with the 24.84 
cents for mail given above. 



70 RAILWAY MAIL PAV. 

The department's claims as to the overpay of railroads for mail 
transportation are all predicated on the soundness of its allotment 
of ''dead" and ''deadhead" space, as set forth in said Document No. 
105. We have demonstrated the unfairness of such allotment and 
find that the department has totally failed to justify its claims that 
the railroads are overpaid for mail transportation. 

While not specifically admitted, we think the Second Assistant 
Postmaster General, representing the department, virtually admitted 
the error when he stated in the hearings, page 1499, he could not say 
that it was possible to operate the railroads without having some of 
this dead space connected with mail service. Furthermore, the 
latest bill approved by the department (H. R. 17042) provides for 
authorization of space by 60, 30, and 15 foot units, which involves 
an authorization of much of the so-called dead space. Thus the de- 
partment has tacitly admitted its error, although its representatives 
were not willing to do so in express terms at the hearings. 

DEPARTMENT SUBMITS A SECOND PLAN. 

The demonstration and realization of the injustice and unadminis- 
trableness of the department's suggested bill of August 12, 1911, 
doubtless caused the then Postmaster General, Mr. Hitchcock, on 
January 20, 1913, to submit a second draft of a bill for regulation of 
railway mail pay, which reads as follows : 

TENTATIVE DRAFT OF PROPOSED LAW FOR REGULATION OF RAILWAY MAIL PAY. 

The Postmaster General is authorized and directed to require companies operating 
railroads by steam, electricity, or other motive power, carrying the mails to furnish, 
under oath and seal, not less frequently than once in each fiscal year, such information 
relating to the service, operation, receipts, and expenditures, and such other informa- 
tion of such roads for a period of not less than thirty days, to be designated by him, 
as may in his judgment be deemed necessary to enable him to ascertain the cost to 
the companies of carrying the mails on their respective roads and the proper com- 
pensation to be paid for that service. He shall require all such companies to submit 
such information not later than March first, nineteen hundred and fourteen, and in 
each fiscal year thereafter, at such times and for such periods as he shall prescribe. It 
shall be the duty of such railroad companies to furnish such information, and if any 
railroad company fails or refuses to do so when required its compensation for service 
rendered thereafter until such company shall comply and an adjustment is made by 
the Postmaster General shall be forfeited to the United States and shall be withheld 
as liquidated damages. 

If any ofiicer, agent, or employee of a railroad company shall knowingly furnish any 
iniormation required under the provisions of this act that is false and fraudulent he 
shall be fined not more than twenty thousand dollars and imprisoned not more than 
five years. 

The Postmaster General shall determine the cost to each raihoad company of carry- 
ing the mails on its respective road or roads, and shall verify and state the result in 
such form and manner as he shall deem proper. For this purpose he shall transmit 
ihe information furnished by the raihoad companies relating to the operating expendi- 
tures to the Interstate Commerce Commission, who shall credit, assign, and apportion 
such operating expenditures to the passenger and freight services, and report the result 
as to the passenger service to the Postmaster General. The Postmaster General is 
authorized to credit, assign, and apportion the passenger operating expenses as reported 
to him by the Interstate Commerce Commission, and the taxes in such manner as will 
determine the proportion thereof chargeable to the mail service, a statement of which 
shall be given the company concerned. If any railroad company shall object to the 
method of crediting, assigning, and apportioning the passenger operating expenses 
and taxes to the mail service, it may file objection with the Postmaster General within 
twenty days after such statement is made to the company, and the Postmaster General 
shall thereupon certify the method and objection and such papers as in his judgment 
may be essential to an understanding of the method, to the Interstate Commerce 



BAIL WAY MAIL PAY. 71 

Commission, who shall review the finding of the Postmaster General and aflarm, 
modify, or revise the same, and certify the result to the Postmaster General, which 
action thereon shall be final. 

The Postmaster General is authorized and directed to readjust the pay to companies 
operating railroads for the transportation and handling of the mails and furnishing 
facilities in connection therewith, not less frequently than once in each fiscal year, 
commencing with July first, nineteen hundred and fourteen, at a rate of compensa- 
tion per annum equal to the cost to the railroad companies of carrying the mails as 
ascertained by him, and six per centum of such cost; in addition, companies may be 
allowed such additional amounts, if any be necessary, as shall render the whole a 
proper proportion of a fair and reasonable return on the value of the property neces- 
sarily employed in connection with the mail service: Provided, That when such sum 
doe'^ not equal §25 per mile per annum, he may, in his discretion, allow not exceeding 
such rate. 

Railroad companies whose railroads were constructed in whole or in part by a land 
grant made by Congress, on the condition that the mails should be transported over 
their roads at such price as Congress should by law direct, shall receive not exceeding 
the cost to them of performing the service. 

Information shall be furnished and adjustments made as nearly as practicable by 
accounting systems or roads, and the cost and the compensation for the term shall 
be stated for all service covered by each system or road. The routes for a system 
or road may be stated for administrative purposes in such manner as the Postmaster 
General may determine. 

The Postmaster General may order new or additional service during a term for 
which an adjustment shall have been made or service authorized on any system or 
road in any train operated by such system or road over any part of the trackage 
included in the adjustment or authorization, and without additional compensation 
therefor during such term. 

He may order service over new or additional trackage of an adjusted system or 
road during a term and state the amount performed for the remainder of such term, 
on statistics obtained for the first thirty days of service. Payment therefor may be 
made at not exceeding the average rate per car-foot mile for the system or road 
ascertained at the regular adjustment. Entire discontinuance of service over track- 
age included in the adjustment or thereafter added shall be deducted for at the car- 
foot mile rate of adjustment or mile rate of authorization. In case the operation of 
service over trackage included in an adjustment or thereafter added is undertaken 
by another com^pany during the term, the same may be recognized by the Postmaster 
General, provided the companies in interest shall file with him their joint agreement 
as to the part of the compensation of the old operating company to be paid the new 
operating company; otherwise payment to the company first authorized shall be full 
payment for all service performed for the term. 

The Postmaster General may order service over trackage of a railroad company not 
operating service under an adjustment or authorization after the regular adjustment 
for the remainder of the term, and pay therefor at not exceeding $42.75 per mile of 
trackage per annum. 

Service over property owned or controlled by a terminal company shall be cont^id- 
ered service of the roads or systems using such property and not that of the terminal 
company. 

Railroad companies carrying the mails shall furnish all necessary facilities for caring 
for and handling them while in their custody. They shall furnish all cars or parts 
of cars used in the transportation and distribution of the mails, and place them in 
stations before the departure of trains when required to do so. They shall provide 
side, terminal, and direct transfer service and all station and depot space and rooms 
for handling, distribution, and transfer of mails en route, and for offices and rooms 
for the employees of the postal service engaged in such transportation when ordered 
by the Postmaster General. 

Every raihoad company carrying the mails shall carry on any train it operates and 
without extra charge therefor the persons in charge of the mails, and when on duty 
and traveling to and from duty, all duly accredited agents and officers of the Post 
Office Department and the postal service, while traveling on official business, upon 
the exhibition of their credentials. 

All cars or parts of cars used for the Railway Mail Service shall be of such construc- 
tion, style, length, and character, and furnished in such manner as shall be required 
by the Postmaster General, and shall be constructed, fitted up, maintained, heated, 
lighted, and cleaned by and at the expense of the railroad companies. No payment 
shall be made for service by any railway post-office car which is not sound in material 
and construction, and which is not equipped with sanitary drinking-water containers 



72 RAILWAY MAIL PAY. 

and toilet facilities, nor unless such car is regularly and thoroughly cleaned. No pay 
for service shall be allowed for the operation of any wooden railway post-office car 
unless constructed substantially in accordance with the most approved plans and speci- 
fications of the Post Office Department for such type of cars, nor for any wooden railway 
post-office car run in any train between adjoining steel or steel underframe cars, or 
between the engine and steel or steel underframe car adjoining. After the first of 
July, nineteen hundred and seventeen, the Postmaster General shall not approve or 
allow to be used or pay for any full railway post-office car not constructed of steel or 
steel underframe or equally indestructible material, and not less than twenty-five 
per centum of the railway post-office cars of a railroad company not conforming to this 
provision shall be replaced with cars constructed of steel annually after June, nineteen 
nundred and thirteen ; and all cars accepted for this service and contracted for by the 
railroad companies after the passage of this act shall be constructed of steel. The 
Postmaster General shall make deductions from the pay of the railroad companies 
on the basis of the value of the service computed on the car-foot-mile basis in all cases 
where the cars do not comply with the provisions of this act. 

The space in cars devoted to the use of the mails, as ascertained during the period 
fixed by the Postmaster General for the rendition of information by the raihoad com- 
panies, shall be taken as the basis for computing the car-foot miles devoted to the mail 
service for the purpose of readjustment, effective from the firstof July next following: 
Provided, That no credit shall be given for space in cars devoted to the distribution of 
the mails unless such space shall be authorized by the Postmaster General or unless 
he shall determine that its use is made necessary by a specific authorization. In 
computing the car-foot miles, the mail service shall be charged in both directions for 
a line of railway post-office cars with the maximum space authorized in either direction. 

If any railroad company shall fail or refuse to provide cars or apartments in cars for 
distribution purposes when required by the Postmaster General, or shall fail or refuse 
to construct, fit up, maintain, heat, light, and clean such cars and provide such appli- 
ances for use in case of accident as may be required by the Postmaster General, it 
shall be fined such sum as shall, in the discretion of the Postmaster General, be deemed 
proper. 

The Postmaster General shall in all cases decide upon what trains and in what 
manner the mails shall be conveyed. Every railroad company carrying the mails 
shall carry on any train it operates all mailable matter directed to be carried thereon. 
If any railroad company shall fail or refuse to transport the mails when required by the 
Postmaster General upon any train or trains it operates, such company shall be fined 
such amount as may, in the discretion of the Postmaster General, be deemed proper. 

The Postmaster General may make deductions from the pay of railroad companies 
carrying the mails under the provisions of this act for reduction in service or frequency 
of service where, in his judgment, the importance of the facilities withdrawn or 
reduced requires it, and impose fines upon them for delinquencies. He may deduct 
the price of the value of the service in such cases where it is not performed, and not 
exceeding three times its value if the failure be occasioned by the fault of the railroad 
company. 

The Postmaster General is authorized to have such weights of mails and measure- 
ments of space taken and to collect such other information by sworn employees of the 
Post Office Department as he may deem necessary and to have such information stated 
and verified to him by such employees, under such instructions as he may consider 
just to the Post Office Department and the railroad companies, to assist in the ascertain- 
ment of the space used for the transportation and the handling of the mails on rail- 
roads, and to employ such special clerical and other assistance as shall be necessary 
to carry out the provisions of this act, and to rent quarters- in Washington, District of 
Columbia, if necessary, for the clerical force engaged thereon, and to pay for the same 
out of the appropriation for inland transportation by railroads. 

The provisions of this act shall apply to service operated by railroad companies 
partly by railroad and partly by steamboats. 

The provisions of this act respecting the rate of compensation and the determina- 
tion thereof shall not apply to mails conveyed under special arrangement in freight 
trains, for which a rate not exceeding the usual and just freight rates may be paid, in 
accordance with the classifications and tariffs approved by the Interstate Commerce 
Commission. 

It shall be unlawful for any railroad company to refuse to carry the mails at the 
rates of compensation provided by law when and for the period required by the 
Postmaster General so to do, and for every such offense it shall be fined not exceeding 
15,000. 

All laws or parts of laws inconsistent herewith are hereby repealed. 



KAILWAY MAIL PAY. 73 

It will be noted that, unlike his first plan, in which he arrogated to 
himself the ability of crediting, assignmg, and apportioning operatuig 
expenses to the passenger and freight services m railway transpor- 
tation, the Postmaster General suggested putting that responsibility 
upon the Interstate Commerce Commission, but still desired to re- 
serve to himself the right to pay the railroad companies on the basis 
of the ascertained cost to the railroad companies for carrying the mail 
and 6 per cent interest on such cost, with the right, if he deeni best, 
of allowing the railroads such additional amounts, "ii any be neces- 
sary," according to his idea, as shall render the whole a proper pro- 
portion of a fair and reasonable return on the value of the property 
necessarily employed in connection with the mail service. 

This second suggested plan of the department was considered by 
our committee as faulty and undesirable, as it would delegate prac- 
tically dictatorial powers to the Postmaster General, necessitate 
making ascertainments and different rates for each of the 795 rail- 
roads carrying the mails, the adoption of many arbitraries, which, 
under the present lack of uniform, scientific method of apportionment 
of costs to railroads, would not only make the plan undesu-able but 
practically unadministrable. 

DEPARTMENT SUBMITS A THIRD PLAN. 

Upon demonstration, with resultant recognition of the vital defects 
of its second plan, the department on February 12, 1914, abandoned 
its scheme for ascertainment and apportionment of operating and 
capital cost and submitted the following tentative draft of a third bill: 

• 

A TENTATIVE DRAFT OF SUGGESTIONS FOR RECOMMENDATION FOR LEGISLATION AND 
REGULATION OF RAILROAD MAIL SERVICE AND COMPENSATION THEREFOR. 

The Postmaster General is authorized and directed to readjust the compensation 
to be paid to railroad companies from July first, nineteen hundred and fourteen, for 
the transportation and handling of the mails and furnishing facilities and services in 
connection therewith upon the conditions and at the rates hereinafter provided. 

The Postmaster General may authorize railroad mail service and may state railroad 
mail routes from July first, nineteen hundred and fourteen, and thereafter, in such 
manner as he may deem proper. Any one or more of the classes of service hereinafter 
described and provided for may be authorized on a stated route. 

Service herein provided for shall be of five classes, nam.el}^, full railway post office 
car mail service, apartment railway post office car mail service, storage car mail service, 
closed-pouch mail service, and side, terminal, and transfer mail service. 

Full railway post office car mail service shall be service by cars forty feet or more in 
length constructed, fitted up, and maintained for the distribution of mails on trains 
Four standard sizes of fall railway post-office cars may be authorized and paid for, 
namely, cars forty feet, fifty feet, sixty feet, and seventy feet in length. 

Apartment railway post office car mail service shall be service by apartments less 
than forty feet in length in cars constructed and fitted u.p and maintained for the distri- 
bution of mails on trains. Five standard sizes of apartment railway post office cars 
may be authorized and paid for, namel}^, apartmentr- ten feet, fifteen feet, twenty feet, 
twenty-five feet, and thirty feet in length. 

Storage-car mail service shall be service by cars used for the storage and carriage 
of mails in transit other than by full and apartment railway po-t-office cars. Four 
standard sizes of storage cars may be authorized and paid for, namely, cars forty feet, 
fifty feet, sixty feet, and seventy feet in length: Provided, That less than forty feet 
of storage space may be authorized in baggage cars on trains upon which full railway 
post-office cars or apartment railway post-office cars are not operated. 

Service by full and apartment railway post-office cars and storage cars shall include 
the carriage therein of all mail matter, equipment, and sr.p])]ies for the mail .-ervice 
and the employees of the Postal Service or Post Office Department, as shall be directed 
by the Postmaster General to be so carried. 



74 RAILWAY MAIL PAY. 

Closed-pouch mail service shall be the transportation and handling by railroad 
employees of mails on trains on which full or apartment railway post-office cars are 
not authorized, except as hereinbefore provided. • 

Side, terminal, and transfer mail service shall be the transportation of mails between 
railroad stations and post offices supplied therefrom and between railroad stations. 

The Postmaster General shall, from July first, nineteen hundred and fourteen, 
restate the service upon the several routes as authorized under this act by making 
such authorizations of service of the several classes hereinbefore described as he may 
deem necessary and pay for the service performed in accordance therewith at not 
exceeding the following rates, namely: 

For full railway post-office car mail service at not exceeding 20 cents for each mile 
of service by a sixty-foot car or its equivalent in authorized car space. 

In addition thereto he may allow not exceeding $1.45 as an initial rate and the 
same as a terminal rate for each one-way trip of a sixty-foot car, or a prorata part 
thereof for a car of less length, and not exceeding 12 cents for the first two thousand 
pounds or less, and 12 cents for each additional two thousand pounds of the average 
weight of mails loaded or unloaded at initial and terminal of each car run. 

For apartment railway post-office car mail service at not exceeding 18 cents for 
each mile of service by the equivalent in authorized space of a sixty-foot car if the 
car be other than of steel construction, and 19 cents for each mile of service by the 
equivalent in authorized space of a sixty-foot car if the car be of steel construction. 

In addition thereto he may allow not exceeding $1.40 as an initial rate and the 
same as a terminal rate for each one-way trip of the equivalent in authorized space 
of a sixty-foot car, prorated to the authorized space, and not exceeding 12 cents for 
the first two thousand pounds or less and 12 cents for each additional two thousand 
pounds of the average weight of mails loaded and unloaded at initial and terminal 
of each car run. 

For storage-car mail service at not exceeding 18 cents for each mile of service by 
a sixty-foot car or its equivalent in authorized space. 

In addition thereto he may allow not exceeding $1.30 as an initial rate and the 
same as a terminal rate for each one-way trip of a sixty-foot car or a pro rata part 
thereof for a car of less authorized length, and not exceeding 12 cents for the first two 
thousand pounds or less and 12 cents for each additional two thousand pounds of the 
average weight of mails loaded or unloaded at initial and terminal of each car run. 

For closed-pouch service, on routes upon which closed-pouch service only is per- 
formed, at not exceeding ninety-five per centum of the rates of compensation 
provided by existing^ law for average daily weights of mail carried over the whole 
route; on routes upon which apartment railway post-office car and closed-pouch 
services are performed, at not exceeding $20 per mile per annum for each two thou- 
sand pounds average daily weight of mails carried, and at pro rata of such rate of 
compensation for each one hundred pounds of average daily weight greater or less 
than two thousand pounds; and on routes upon which full railway post-office car and 
closed-pouch services or full railway post-office car, apartment car, and closed-pouch 
services are performed, at not exceeding $19 per mile per annum for each two thou- 
sand pounds average daily weight of mails carried, and at pro rata of such rate of 
compensation for each one hundred pounds of average daily weights greater or less 
than two thousand pounds, the average daily weights to be ascertained in every case 
by the actual weighing of the mails. 

For side, terminal, and transfer mail service the Postmaster General is authorized 
to provide, in his discretion, by regulation screen or other wagon, automobile, or mail 
messenger service under existing law, or to contract with the railroad company, after 
advertisement, for the performance of any or all service on its route. Postmasters at 
post offices of the third and fourth classes shall be eligible as contractors for this service. 

Railroad companies whose railroads were constructed in whole or in part by a land 
grant made by Congress, on the condition that the mails should be transported^ over 
their roads at such price as Congress should by law direct, shall receive only eighty 
per centum of the compensation otherwise authorized by this act, excepting for side, 
terminal, and transfer mail service. 

The initial and terminal rates provided for herein shall cover expenses of loading 
and unloading mails, switching, lighting, heating, cleaning mail cars, and all other 
expenses incidenta.1 to station service and required by the Postmaster General in con- 
nection with the mails that are not included in the car-mile rate. It shall be fixed 
upon the consideration of two elements, namely: First, loading and unloading mails, 
and, second, all other services rendered. For loading and unloading mails it shall 
not exceed 12 cents per ton, and for the remainder of the rate the allowance for full 
railway post-office cars, apartment railway post-office cars, and storage cars shall be 
varied in accordance with the approximate difference in their respective cost of con- 
struction and maintenance. 



RAILWAY MAIL PAY. 75 

For the purpose of ascertaining the average weight of closed-pouch mails per day 
upon which to adjust compensation, the Postmaster General is authorized and directed 
to have such mails carried on the several routes weighed by the employees of the 
Post Office Department for such a number of successive days, not less than thirty- 
five, at such times after July first, nineteen hundred and fourteen, as he may direct, 
and not less frequently than once in every year thereafter, the result to be stated and 
certified in such form and manner as he may direct. In computing the average weight 
of mails per day carried on a railroad route, the whole number of days included in 
the weighing period shall be used as a divisoT. The expenses of taking the weights 
of mails and the compensation to tabulators and clerks employed in connection with 
the weighings, for assistance in completing computations, and of rental, if necessary, 
in Washington, District of Columbia, shall be paid out of the appropriation for inland 
transportation by railroad routes. 

In computing the car miles of the full railway post-office cars and apartment rail- 
way post-office cars the maximum space authorized in either direction of a round-trip 
car run shall be regarded as the space to be computed in both directions, unless other- 
wise mutually agreed upon. 

In computing the car miles of storage cars, the maximum space authorized in either 
direction of a round-trip car run shall be regarded as the space to be computed in both 
directions, unless the car be used by the company hi the return movement, or other- 
wise mutually agreed upon. 

New service and additional service may be authorized at not exceeding the rates 
herein provided, and service may be reduced or discontinued, with pro rata reductions 
in pay, as the needs of the Postal Service may require : Provided, That no additional 
pay shall be allowed for additional closed-pouch eervice on established routes until 
the next regular readjustment of pay therefor on such routes, and no additional pay 
shall be allowed for additional car service unless specifically authorized by the Post- 
master General. 

All cars or parts of cars used for the railroad mail service shall be of such construc- 
tion, style, length, and character, and furnished in such manner, as shall be required 
by the Postmaster General, and shall be constructed, fitted up, maintained, heated, 
lighted, and cleaned by and at the expense of the railroad companies. No pay shall 
be allowed for service by any railway post-office car which is not sound in material and 
construction, and which is not equipped with sanitary drinking-water containers and 
toilet facilities, nor unless such car is regularly and thoroughly cleaned. No pay shall 
be allowed for service by any wooden full railway post-office car unless constructed 
substantially in accordance with the most approved plans and specifications of the 
Post Office Departm.ent for such type of cars, nor for service by any wooden full railway 
post-office car run in any train between adjoining steel cars, or between the engine and 
a steel car adjoining. After the first of July, nineteen hundred and seventeen, the 
Postmaster General shall not approve or allow to be used, or pay for service by any full 
railway post-office car not constructed of steel or steel underframe, or equally inde- 
structible material, and not less than twenty-five per centum of the full railway post- 
office cars of a railroad company not conforming to these provisions on August twenty- 
fourth, nineteen hundred and twelve, shall be replaced with cars constructed of steel 
annually after June, nineteen hundred and thirteen; and all full railway post-office 
cars accepted for this service and contracted for by the railroad companies hereafter 
shall be constructed of steel. In cases of emergency, and in cases where the necessities 
of the service require it, the Postmaster General ma j"" provide for service by full railway 
post-office cars of other than steel or steel underframe construction, and fix therefor 
such rate of compensation, within the maximum herein provided, as shall give consid- 
eration to the inferior character of construction, and the railroad companies shall fur- 
nish service by such cars at such rates so fixed. 

Service over property owned or controlled by another company or a terminal com- 
pany shall be considered service of the railroad company using such property and not 
that of the other or terminal company: Provided, That service over a land-grant road 
shall be paid for as herein provided. 

Railroad companies carrying the mails shall furnish all necessary facilities for caring 
for and handling them while in their custody. They shall furnish all cars or parts of 
cars used in the transportation and distribution of the mails, except as is herein other- 
wise provided, and place them in stations before the departure of trains at such times 
and when required to do so. They shall provide station space and rooms for handling, 
distribution, and transfer of mails in transit, and for offices and rooms for the employees 
of the Postal Service engaged in such transportation , when required by the Postmaster 
General. 

Every railroad company carrying the mails shall carry on any train it operates and 
without extra charge therefor the persons in charge of the mails, and when on duty 
and traveling to and from duty, and all duly accredited agents and officers of the Post 



76 RAILWAY MAIL PAY. 

Office Department and the Postal Service, while traveling on official business, upon 
the exhibition of their credentials. 

If any railroad company carrying the mails shall fail or refuse to provide cars or 
apartments in cars for distribution purposes when required by the Postmaster General, 
or shall fail or refuse to construct, fit up, maintain, heat, light, and clean such cars and 
provide such appliances for use* in case of accident as may be required by the Post- 
master General, it shall be fined such sum as may, in the discretion of the Postmaster 
General, be deemed proper. 

The Postmaster General shall in all cases decide upon what trains and in what 
manner the mails shall be conveyed. Every railroad company carrying the mails 
shall carry on any train it operates and with due speed all mailable matter, equipment, 
and supplies directed to be carried thereon . If any such railroad company shall fail or 
refuse to transport the mails, equipment, and supplies when required by the Post- 
master General or any train or trains it operates, such company shall be fined such 
amount as may in the discretion of the Postmaster General be deemed proper. 

The Postmaster General may make deductions from the pay of railroad companies 
-carrying the mails under the provisions of this act for reduction in service or in fre- 
quency of service where, in his judgment, the importance of the facilities withdrawn 
or reduced requires it and impose fines upon them for delinquencies. He may deduct 
the price of the value of the service in cases where it is not performed, and not ex- 
ceeding three times its value if the failure be occasioned by the fault of the railroad 
•company. 

The provisions of this act shall apply to service operated by railroad companies, 
partly by railroad, and partly by steamboats. 

The provisions of this act respecting the rates of compensation shall not apply to 
mails conveyed under special arrangement in freight trains, for which rates not ex- 
ceeding the usual and just freight rates may be paid, in accordance with the classifii- 
cations and tariffs approved by the Interstate Commerce Commission. 

Railroad companies carrying the mails shall submit under oath, when and in such 
forms as may be required by the Postmaster General, e^ddence as to the performance 
of service. 

The Postmaster General is authorized to have such weights of mails taken and ascer- 
tainments of needed space made and to collect such information by employees of the 
Post Office Department as he may deem necessary, and to have the same stated and 
verified to him by them under such instructions as he may consider just to the Post 
Office Department and the railroad companies, and to employ such clerical and other 
assistance as shall be necessary to carry out the pro"VT-sions of this act, and to rent 
quarters in Washington, District of Columbia, if necessary, for the clerical force engaged 
thereon, and to pay for the same out of the appropriation for inland transportation by 
railroad routes. 

The Postmaster General shall, from time to time, request information from the 
Interstate Commerce Commission as to the revenue received by railroad companies 
from express companies for services rendered in the transportation of express matter, 
and may, in his discretion, arrange for the transportation of mail matter other than of 
the first class at rates not exceeding those so ascertained and reported to him, and it 
shall be the duty of the railroad companies to carry such mail matter at such rates 
fixed by the Postmaster General. 

The Postmaster General is authorized, in his discretion, to petition the Interstate 
Commerce Commission for the determination of a postal carload or less than carload 
rate for transportation of mail matter of the fourth class and periodicals, and may pro- 
vide for and authorize such transportation, when practicable, at such rates, and it 
-shall be the duty of the railroad companies to provide and perform such service at 
such rates and on the conditions prescribed by the Postmaster General. 

The Postmaster General may, in his discretion, distinguish between the several 
classes of mail matter and provide for less frequent dispatches of mail matter of the 
third and fourth classes and periodicals, when lower rates for transportation or other 
economies may be secured thereby without material detriment to the service. 

The Postmaster General is authorized to return to the mails, when practicable foi 
t;he utilization of car space paid for and not needed for the mails, postal cards, stamped 
-envelopes, newspaper wrappers, empty mail bags, furniture, equipment, and other 
supplies for the Postal Service, theretofore withdrawn from the mails as provided by 
law and transported by freight or express, and thereafter transport them in the rail- 
way post-ofiice cars and storage cars herein provided for. 

The Postmaster General in cases of emergency between October first and April first 
-of any year, may hereafter return to the mails empty mail bags and other equipment 



RAILWAY MAIL PAY. 77 

theretofore withdrawn therefrom as required by law, and where such return requires 
additional authorization of car space under the provisions of this act, to pay for the 
transportation thereof as provided for herein out of the appropriation for inland trans- 
portation by railroad routes. 

The Postmaster General may have the weights of mail taken on railroad-mail routes, 
and computations of the average loads of the several classes of cars and other compu- 
tations for statistical and administrative purposes made at such times as he may elect, 
and pay the expense thereof out of the appropriation for inland transportation by 
railroad routes. 

It shall be unlawful for any railroad company to refuse to perform mail service at 
the rates of compensation provided by law when and for the period required by the 
Postmaster General so to do, and for every such offense it shall be fined not exceeding 
$5,000. 

All laws or parts of laws inconsistent herewith are hereby repealed. 

Study of this bill soon convinced our committee that this also 
was unscientific and most undesirable, as giving unnecessary and 
dangerous powers to the Postmaster General and containing rates 
which, if adopted, would be absolutely confiscatory. 

FOURTH DEPARTMENTAL PLAN. 

The demonstration and ultimate realization of the department 
of its mistakes in its third bill resulted in its submission to the House 
of Representatives of a draft of what is known as H. R. 17042. 

For the information of the reader we will reproduce sections 13^ 
14, and 15 of this bill (H. R. 17042, Union Calendar No. 243), the 
only sections which refer to the subject matter of our present study, 
namely, ^^Compensation for the transportation of mail": 

Sec. 13. That the Postmaster General is authorized and directed to readjust the 
compensation to be paid to railroad companies from July first, nineteen hundred 
and fourteen, or as soon thereafter as may be practicable, for the transportation and 
handling of the mails and furnishing facilities and services in connection there- 
with upon the conditions and at the rates hereinafter provided. 

The Postmaster General may state railroad mail routes and authorize mail service 
thereon of the following five classes, namely: Full railway post-office car service, apart- 
ment railway post-office car service, storage-car service, closed-pouch service, and 
side and transfer service. 

Full railway post-office car mail service shall be service by cars forty feet or more 
in length, constructed, fitted up, and maintained for the distribution of mails on 
trains. The authorizations of full railway post-office cars shall be for standard sized 
cars sixty feet in length, inside measurement, except as hereinafter provided. 

Apartment railway post-office car mail service shall be service by apartments less 
than forty feet in length in cars constructed and fitted up and maintained for the 
distribution of mails on trains. Two standard sizes of apartment railway post-office 
cars may be authorized and paid for, namely, apartments fifteen feet and thirty feet 
in length, inside measurement, except as hereinafter provided. 

Storage-car mail service shall be service by cars used for the storage and carriage of 
mails in transit other than by full and apartment railway post-office cars. The authori- 
zations for storage cars shall be for cars sixty feet in length, inside measurement, except 
as hereinafter provided: Provided, That less than sixty feet of storage space may be 
authorized in baggage cars on trains upon which full railway post-office cars or apart- 
ment railway post-office cars are not operated. 

Service by full and apartment railway post-office cars and storage cars shall include 
the carriage therein of all mail matter, equipment, and supplies for the mail service 
and the employees of the Postal Service or Post Office Department, as shall be directed 
by. the Postmaster General to be so carried . 

Closed-pouch mail service shall be the transportation 9,nd handling by railroad 
employees of mails on trains on which full or apartment railway post-office cars are not 
authorized, except as hereinbefore provided. 

Side and transfer mail service shall be the transportation of mails between railroad 
stations and post offices supplied therefrom and between railroad stations. 



78 BAIL WAY MAIL PAY. 

The rates of payment for the services authorized in accordance with this act shall 
be as follows, namely: 

For full railway post-office car mail service at not exceeding 20 cents for each mile 
of service by a sixty-foot car. 

In addition thereto he may allow not exceeding $2 as an initial rate and the same 
as a terminal rate for each one-way trip of a sixty-foot car. 

For apartment railway post-office car mail service at not exceeding 10 cents for each 
mile of service by a thirty-foot apartment car, and 5 cents for each mile of service by 
a fifteen-foot apartment car. 

In addition thereto he may allow not exceeding $1 as an initial rate and the same 
as a terminal rate for each one-way trip of a thirty-foot apartment car, and 50 cents as 
an initial rate and the same as a terminal rate for each one-way trip of a fifteen-foot 
apartment car. 

For storage-car mail service at not exceeding 18 cents for each mile of service by a 
sixty-foot car. 

In addition thereto he may allow not exceeding $2.50 as an initial rate and the same 
as a terminal rate for each one-way trip of a sixty-foot car. 

Where authorizations are made for cars of the standard lengths of sixty, thirty, and 
fifteen feet, as provided by this act, and the railroad company is unable to furnish 
such cars of the length authorized, but furnishes cars of lesser length than those author- 
ized, but which are determined by the department to be sufficient for the service, the 
Postmaster General may accept the same and pay only for the actual space furnished 
and used, the compensation to be not exceeding pro rata of that provided by this act 
for the standard length so authorized: Provided, That the Postmaster General may 
accept cars and apartments of greater length than those of the standard requested, 
but no compensation shall be allowed for such excess lengths. 

For closed-pouch service, on routes upon which closed-pouch service only is per- 
formed, at not exceeding ninety-five per centum of the rates of compensation provided 
by existing law for average daily weights of mail carried over the whole route; on 
routes upon which apartment railway post-office car and closed-pouch services are 
performed, at not exceeding $20 per mile per annum for each two thousand pounds 
average daily weight of mails carried, and at pro rata of such rate of compensation for 
each one hundred pounds of average daily weight greater or less than two thousand 
pounds; and on routes upon which full railway post-office car and closed-pouch serv- 
ices or full railway post-office car, apartment-car, and closed-pouch services are per- 
formed, at not exceeding $19 per mile per annum for each two thousand pounds 
average daily weight of mails carried, and at pro rata of such rate of compensation 
for each one hundred pounds of average daily weights greater or less than two thousand 
pounds, the average daily weights to be ascertained in every case by the actual weigh- 
ing of the mails. 

For side and transfer mail service the Postmaster General is authorized to provide, 
in his discretion, by regulation screen or other wagon, automobile, or mail messenger 
service under existing law, or to contract with the railroad company, after advertise- 
ment, for the performance of any or all service on its route. Postmasters at post 
ofiices of the third and fourth classes shall be eligible as contractors for this service. 

Railroad companies whose railroads were constructed in whole or in part by a land 
grant made by Congress, on the condition that the mails should be transported over 
their roads at such price as Congress should by law direct, shall receive only eighty 
per centum of the compensation otherwise authorized by this act, excepting for side 
and transfer mail service. 

The initial and terminal rates provided for herein shall cover expenses of loading 
and unloading mails, switching, lighting, heating, cleaning mail cars, and all other 
expenses incidental to station service and required by the Postmaster General in 
connection with the mails that are not included in the car-mile rate. The allowance 
for full railway post-ofl&ce cars, apartment railway post-office cars, and storage cars 
may be varied in accordance with the approximate difference in their respective cost 
of construction and maintenance. 

For the purpose of ascertaining the average weight of closed-pouch mails per day 
upon which to adjust compensation, the Postmaster General is authorized and directed 
to have such mails carried on the several routes weighed by the employees of the Post 
Office Department for such a number of successive days, not less than thirty-five, 
at such times after July first, nineteen hundred and fourteen, as he may direct, and 
not less frequently than once in every year thereafter, the result to be stated and cer- 
tified in such form and manner as he may direct. In computing the average weight 
of mails per day carried on a railroad route, the whole number of days included in 



RAILWAY MAIL PAY. 79 

the weighing period shall be used as a divisor. The expenses of taking the weights 
of mails and the compensation to tabulators and clerks employed in connection 
with the weighings, for assistance in completing computations, and of rental, if neces- 
sary, in Washington, District of Columbia, shall be paid out of the appropriation for 
inland transportation by railroad routes. 

In computing the car miles of the full railway post-office cars and apartment rail- 
way post-office cars, the maximum space authorized in either direction of a round-trip 
car run shall be regarded as the space to be computed in both directions, unless other- 
wise mutually agreed upon. 

In computing the car miles of storage cars, the maximum space authorized in either 
direction of a round- trip car run shall be regarded as the space to be computed in 
both directions, unless the car be used by the company in the return movement, or 
otherwise mutually agreed upon. 

New service and additional service may be authorized at not exceeding the rates 
herein provided, and service may be reduced or discontinued with pro rata reductions 
in pay, as the needs of the Postal Service may require: Provided, That no additional 
pay shall be allowed for additional closed-pouch service on established routes until 
the next regular readjustment of pay therefor on such routes, and no additional pay 
shall be allowed for additional car service unless specifically authorized by the Post- 
master General. 

All cars, or parts of cars, used for the railroad mail service shall be of such construc- 
tion, style, length, and character, and furnished in such manner as shall be required 
by the Postmaster General, and shall be constructed, fitted up, maintained, heated, 
lighted, and cleaned by and at the expense of the railroad companies. No pay 
shall be allowed for service by any railway post-office car which is not sound in 
material and construction, and which is not equipped with sanitary drinking-water 
containers and toilet facilities, nor unless such car is regularly and thoroughly cleaned. 
No pay shall be allowed for service by any wooden full railway post-office car unless 
constructed substantially in accordance with the most approved plans and specifica- 
tions of the Post Office Department for such type of cars, nor for service by any wooden 
full railway post-office car run in any train between adjoining steel cars, or between 
the engine and a steel car adjoining. After the first of July, nineteen hundred and 
seventeen, the Postmaster General shall not approve or allow to be used, or pay for 
service by, any full railway post-office car not constructed of steel or steel underframe, 
or equally indestructible material, and not less than twenty-five per centum of the 
full railway post-office cais of a railroad company not conforming to these provisions 
on August twenty-fourth, nineteen hundred and twelve, shall be replaced with cars 
constructed of steel annually after June, nineteen hundred and thirteen; and all full 
railway post-office cars accepted for this service and contracted for by the railroad 
companies hereafter shall be constructed of steel. Until July first, nineteen hundred 
and seventeen, in cases of emergency and in cases where the necessities of the service 
require it, the Postmaster General may provide for service by full railway post-office 
cars of other than steel or steel underframe construction, and fix therefor such rate of 
compensation within the maximum herein provided as shall give consideration to 
the inferior character of construction, and the railroad companies shall furnish service 
by such cars at such rates so fixed. 

Service over property owned or controlled by another company or a terminal com- 
pany shall be considered service of the railroad company iising such property and 
not that of the other or terminal company: Provided, That service over a land-grant 
road shall be paid for as herein provided. 

Railroad companies carrying the mails shall furnish all necessary facilities for 
caring for and handling them while in their custody. They shall furnish all cars 
or parts of cars used in the transportation and distribution of the mails, except as is 
herein otherwise provided, and place them in stations before the departure of trains 
at such times and when required to do so. They shall provide station space and 
rooms for handling, distribution, and transfer of mails in transit, and for offices and 
rooms for the employees of the Postal Service engaged in such transportation, when 
required by the Postmaster General. 

Every railroad company carrying the mails shall carr}' on any train it operates and 
without extra charge therefor the persons in charge of the mails, and when on duty 
and traveling to and from duty, and all duly accredited agents and officers of the 
Post Office Department and the Postal Service, while traveling on official business, 
upon the exhibition of their credentials. 

If any railroad company carrying the mails shall fail or refi se to provide cars or 
apartments in cars for distributicn pLipcses when required by the Postmaster General, 
or shall fail or refuse to construct, fit up, maintain, heat, light, and clean such cars 



80 RAILWAY MAIL PAY. 

provide such appliances for use in case of accident as may be required by the 
Postmaster General, it shall be fined such reasonable sum as may, in the discretion 
of the Postmaster General, be deemed proper. 

The Postmaster General shall in all cases decide upon what trains and in what man- 
ner the mails shall be conveyed. Every railroad company carrying the mails shall 
carry on any train it operates and with due speed all mailable matter, equipment, and 
supplies directed to be carried thereon. If any such railroad company shall fail or 
refuse to transport the mails, equipment, and supplies when required by the Post- 
master General on any train or trains it operates, such company shall be fined such 
reasonable amount as may, in the discretion of the Postmaster General, be deemed 
proper. 

The Postmaster General may make deductions from the pay of railroad companies 
carrying the niails under the provisions of this act for reduction in service or in fre- 
quency of service where, in his judgment, the importance of the facilities withdrawn or 
reduced requires it and impose fines upon them for delinquencies. He may deduct 
the price of the value of the service in cases where it is not performed, and not exceed- 
ing three times its value if the failure be occasioned by the fault of the railroad com- 
pany. 

The provisions of this act shall apply to service operated by railroad companies, 
partly by railroad, and partly by steamboats. 

The provisions of this act respecting the rates of compensation shall not apply to 
mails conveyed under special arrangement in freight trains, for which rates not exceed- 
ing the usual and just freight rates may be paid, in accordance with the classifications 
and tariffs approved by the Interstate Commerce Commission. 

Railroad companies carrying the mails shall submit under oath, when, and in such 
form as may be required by the Postmaster General, evidence as to the performance of 
service. 

The Postmaster General is authorized to employ such clerical and other assistance as 
shall be necessary to carry out the provisions of this act, and to rent quarters in Wash- 
ington, District of Columbia, if necessary, for the clerical force engaged thereon, and to 
pay for the same out of the appropriation for inland transportation by railroad routes, 
The Postmaster General shall, from time to time, request information from the Inter- 
state Commerce Commission as to the revenue received by railroad companies from 
express companies for services rendered in the transportation of express matter, and 
may, in his discretion, arrange for the transportation of mail matter other than of the 
first class at rates not exceeding those so ascertained and reported to him, and it shall 
be the duty of the raihoad companies to carry such mail matter at such rates fixed by 
the Postmaster General. 

The Postmaster General is authorized, in his discretion, to petition the Interstate 
Commerce Commission for the determination of a postal carload or less-than-carload 
rate for transportation of mail matter of the fourth class and periodicals, and may 
provide for and authorize such transportation, when practicable, at such rates, and it 
shall be the duty of the railroad companies to provide and perform' such service at 
such rates and on the conditions prescribed by the Postmaster General. 

The Postmaster General may, in his discretion, distinguish between the several 
classes of mail matter and provide for less frequent dispatches of mail matter of the 
third and fourth classes and periodicals, when lower rates for transportation or other 
economies may be secured thereby without material detriment to the service. 

The Postmaster General is authorized to return to the mails, when practicable for the 
utilization of car space paid for and not needed for the mails, postal cards, stamped 
envelopes, newspaper wrappers, empty mail bags, furniture, equipment, and other 
supplies for the Postal Service. 

The Postmaster General, in cases of emergency between October first and April 
first of any year, may hereafter return to the mails empty mail bags and other equip- 
ment theretofore withdrawn therefrom as required by law, and, where such return 
requires additional authorization of car space under the provisions of this act, to pay 
for the transportation thereof as provided for herein out of the appropriation for inland 
transportation by railroad routes. 

The Postmaster General may have the weights of mail taken on railroad-mail 
routes and computations of the average loads of the several classes of cars and other 
computations for statistical and administrative purposes made at such times as he 
may elect, and pay the expense thereof out of the appropriation for inland transpor- 
tation by railroad routes. 

It shall be unlawful for an,y railroad company to refuse to perform mail service at 
the rates of compensation provided by law when and for the period required by the 
Postmaster General so to do, and for every such offense it shall be fined not exceeding 
$5,000. 



RAILWAY MAIL PAY. 81 

Sec. 14. That the unexpended balances of the appropriations for inland transpor- 
tation by railroad routes and for railway post-office car service, by the act of March 
ninth, nineteen hundred and fourteen, making appropriations for the service of the 
Post Office Department for the fiscal year ending June thirtieth, nineteen hundred 
and fifteen, and for other purposes, are hereby available for the purposes of this act. 

Sec. 15. That all laws or parts of laws inconsistent herewith are hereby repealed. 

DEPARTMENTAL RATES CONFISCATORY. 

Perusal of the foregoing sections will readily show the reader that 
through the whole of section 13 permeates the desire of the Post 
OflS.ce Department for increased dictatorial powers, and although the 
rates suggested therein are a slight increase over those suggested in 
the third tentative draft of February 12, 1914, yet these rates, if 
adopted, would be absolutely confiscatory, as the average revenue 
to the railroads thereunder would be less than 21.8 cents for hauUng 
a 60-foot mail car 1 mile. The justification for making such an 
assertion is based on the department's own figures. 

According to Table 7 of Document 105, the operating expenses and 
taxes of the railroads alone amounted to slightly over 3.08 mills per 
mail car-foot mile, or 18.49 cents for hauling a 60-foot mail car 1 mile. 
This estimate excludes the advertising and other traflSc expenses with 
which the department claimed the mail should not be burdened. The 
margin between this 18.49 cents and the less than 21.8 cents average 
rate under this bill is so small that if similar unprofitable rates were 
made on all railroad traffic the roads would necessarily have to go 
into bankruptcy, because there would be no suflB.cient allowance for 
capital charges. 

According to the statistics of railways in the United States for 1911 
published by the Interstate Commerce Commission, operating ex- 
penses and taxes were 72.53 per cent of the operating revenues. At 
the same ratio, 7 cents instead of the 3.32 cents allowed under the 
department rates, would have to be added to the 18.49 cents to 
allow for capital charges, as the 18.49 cents covers only operating 
expenses and taxes. In other words, 25.49 cents would have to be 
paid the railroads for hauling a 60-foot car 1 mile to yield the rail- 
roads from the mail business the average rate of profit now realized 
on all railroad traffic, both freight and passenger taken together. 

This is one of many incidents showing the danger of accepting and 
acting upon the recommedations of departments. It also illus- 
trates the necessity for checking the present trend toward the initia- 
tion and control of legislation by officers of the administrative branch 
of Government. 

DICTATORIAL POWER DESIRED. 

It will be further noted in the bill that in its persistent efforts to 
secure dictatorial power the Post OflSce Department has broken all 
records. The department has persistently insisted that ''not ex- 
ceeding'' should prefix any rates that Congress might establish, and 
this bill contains such qualification, and also contains a clause com- 
pelling the railroads to carry mail. 

It is claimed that ''not exceeding" is but a continuance of existing 
law, but heretofore the railroads have not been compelled by law to 

56211—14 C 



82 RAILWAY MAIL PAY. 

Carry mail. They are supposed to have accepted the rates as a vol- 
untary act, which in itself was assumed to be sufficient guaranty 
that rates will not be too low, and it was only necessary for Congress 
to fix maximum rates; but this assumption was not sound, as a rail- 
road would hardly dare to refuse to carry mail because of irritation 
resultant from such action in the community in which the road 
operates. 

The Interstate Commerce Commission is now authorized to fix 
maximum freight rates, it being left to the railroads to fix the mini- 
mum. It would be considered' preposterous that the commission 
should fix the maximum rates at which railroads must carry freight 
and leave the shippers to fix the minimum, or for State commissions 
to fix maximum passenger rates, leaving passengers to ^x the mini- 
mum, yet this is the very thing that the Post Office Department pro- 
poses for mail pay in the departmental bill. Congress is to fix the 
maximum rates and the shipper — the Post Office Department — is to 
fix the minimum rates, and the railroads are to be compelled to carry 
the mail and the postal employees accompanying same. This is a 
proposition without parallel in the history of rate making. 

The Commercial Basis. 

The Post Office Department contends that ''rates for carrying 
the mails on railroads should be less than those which might be 
iixcd for commercial business.' ' We believe that railroads are enti- 
tled to be paid for mail transportation on a commercial basis. 

It is suggested by the Post Office Department that the Govern- 
ment might be favored with rates lower than those warranted on a 
commercial basis, because of the following considerations: 

1. The certainty, constancy, and homogeneity of traffic. 

2. The certainty and regularity of payment. 

3. Railroads are not built primarily to carry mails. 

4. The protection to their mail trains which railroads, as Government agencies, 
receive against unlawful acts in interference with or obstruction of the mails carried. 

5. The principle of public utility. 

FuU consideration of this argument convinces us that this is fal- 
lacious. The money paid for freight, passenger, express, and mail 
transportation is all ultimately paid by the public. Fair rates should 
be made in all branches of traffic, otherwise a deficiency of return 
from one branch must be made up by an overcharge from another 
branch. The Government is the people organized. The patrons of 
the freight or passenger train services are the public unorganized. 
We see no reason for favoring the people organized as against the 
people unorganized; 

Regarding the certainty of the traffic, some claim that the railroads 
are not compelled to spend as much to got the mail traffic in the way 
of advertising and traffic bureaus as in the case of the passenger 
traffic proper, and argue that this would tend to make the mail car 
somewhat less expensive per mile than the regular passenger car; 
but even if this were a fact, it is in no wise in conflict with the com- 
mercial principle. To make rates correspond with differences in 
expense is merely an application of that principle. We shall return 
to this difference between the mail car and passenger car in anotheY 
chapter. 



EAILWAY MAIL PAY. 83 

Unfortunate also is the attempt of the department to find an 
analogy between the commutation passenger traffic and the mail 
traffic. The making of low rates per passenger when there are many 
passengers in a car is not in conflict with the commercial principle. 
The earnings per car mile may be greater than in the regular pas- 
senger service. Only in its infancy may the commutation service be 
regarded as a by-product. In the long run it should be as profitable 
as the regular passenger traffic. 

The "homogeneity'' of the mail traffic strikes us as a figment of the 
imagination. In what sense eggs, meat, hardware, and letters are 
homogeneous we will allow the reader to determine. The depart- 
ment's quotation on this subject is from a writer who wrote before 
the days of the parcel post. 

In the matter of the certainty of the payment, we can see no 
reason for regarding the department as a favored shipper. Is 
payment once a month for mail service any better than payment 
in advance from the passenger? Collection in small sums from 
milhons of passengers may be more expensive than receiving one 
check a month, but, if so, a difference in expense may be recognized 
without departing from the commercial principle. 

It is said that railroads are not built primarily to carry the mails. 
This may be true. They are built primarily to get all the traffic that 
can be developed, and, according to the commercial principle, each 
great branch of that trafhc should, if possible, be made to bear its 
proportionate share of the expenses. 

The protection of mail trains in ca-e of strikes is not to be regarded 
as something upon which a money value can be put. That we should 
ask the railroads to make a special mail rate upon the understanding 
that the armed force of the United States Government would help 
them in case of labor troubles is abhorrent to our minds. 

We are asked to consider the principle of '^public utility" as a 
reason for departing from the commercial principle. Just as rail- 
roads accept a low rate of profit on one class of freight in order to 
develop a given territory, they might, it is urged, be called upon to 
make a special rate on mail because mail helps to diffuse intelli- 
gence. The desirabihty of diffusmg intelligence may well be taken 
into account in fixing the postage rates to be paid by the public, but 
it is not clear that this has any connection with what the Govern- 
ment should pay the railroads. Do we ask a mail clerk to work for 
less than a normal salary because he handles letters ? Does the 
manufacturer of desks make a special price to the Post Office De- 
partment because the mail service helps to diffuse intelligence? 
Then why should the railroad, which is merely another instrumen- 
tality used by the Government in its mail business, sell its services 
at an abnormally low rate if the Government is able to pay the 
normal rate ? 

The money paid for passenger, express, and mail transportation 
is all ultimately paid by the public. If fair rates are made in all 
branches of the traffic, a deficiency in return from one branch must 
be made up by a tax laid upon some other branch. 

The patrons of cither the freight or passenger service should pay 
no more and no less than a fair rate, and the Government should pay 
no more and no less than a fair rate for the transportation of mail. 



84 KAIL WAY MAIL PAY. 

Railway cost accounting is in an undeveloped state, and it does 
not seem possible to reach absolute conclusions on the basis of cost 
at the present time, but the goal should be, in future tests of the 
fairness of the rates which we recommend, to assign to each service 
those expenses which can be assigned directly and to apportion upon 
equitable bases those expenses which are common to the various 
services. 

In the meanwhile we are confident that our general plan is sound, 
and if enacted into law will always be retained, and that our sug- 
gested rates will be found reasonable, though probably slightly too 
low. 



CHAPTER V. 

WHAT IS A REASONABLE AND JUST RATE FOR TRANSPORTING 

MAIL BY RAILROAD? 

The annual appropriation by Congress for railway mail pay is to 
be looked upon as the price to be paid for the purchase of certain 
services from private corporations. As previously stated, the Gov- 
ernment should be viewed as the people organized. The people 
unorganized — that is, a myriad of individual shippers and travelers — 
are also purchasers of transportation services from these same cor- 
porations. Can there be any difference between the price which the 
people organized should pay and that which the people unorganized 
should pay, except as that difference may affect the cost of perform- 
ing the service ? 

If 15 passengers collectively should pay an average of 26 cents for 
1 mile of transportation in a passenger car, not including their bag- 
gage, should not the Government pay the same rate for an equivalent 
service ? Why should the pubhc in one capacity receive any favored 
treatment over the pubUc in another capacity? 

It would seem that the same principles that determine whether 
passenger rates or freight rates are just and reasonable should apply 
m the determination of what is a just and reasonable mail rate. 

If it were possible at this time to discover the actual cost of per- 
forming the mail service and the fair value of the capital employed 
therein, then the cost including taxes plus a reasonable return on 
the capital employed might be determinative. At present such 
information is not available, as for over 20 years no separate re- 
ports for railway passenger and other operating expenses have been 
made to the Interstate Commerce Commission or to any other Fed- 
eral Government body. Had these separate reports been made to, 
filed with, and tabulated and presented by the Interstate Commerce 
Commission, our study of railway mail pay would have been much 
easier, as we would have had definite and presumably reliable data 
with which to work down our own apportionment as to the share that 
should be charged to mail steam railroad transportation. 

A start in the right direction has at last been made. Under an 
opinion of the Interstate Commerce Commission, decided June 13, 
1914, ^'In the matter of the separation of operating expenses," an 
announcement of the future policy of the commission was made to the 
effect that it will revise its present Circular No. 3, and, if sufficient 
progress can be made, carriers will be asked to file a special report for 
the year ending June 30, 1915, and as early as practicable all carriers 
of Class I, namely, those roads whose operating expenses exceed 
$1,000,000 a year, will be required to assign and apportion all operat- 
ing expenses between passenger and freight services on bases which 
will be prescribed. 

85 



86 RAILWAY MAIL PAY. 

Whatever may be possible in the future, at this time we can not get 
conclusive cost and investment data on this subject. Such informa- 
tion regarding cost as has been presented at the hearings has been 
considered and is not inconsi-tent with the conclusions we have 
reached on the basis of comparative earnings. In the determination 
of what is a reasonable rate, we have been influenced chiefly by a com- 
parison with the railroad earnings from the passenger service. 

It is true, when the rates in one service are judged by comparison 
with rates in another, the question immediately arises as to the 
reasonableness of the rates used as the standard. If passenger 
earnings are used as a standard, must we not first demonstrate that 
passenger earnings are just and reasonable? Unquestionably so. 

PASSENGER REVENUES A FAIR BASIS FOR COMPARISON. 

The passe:"ger earnings of various railroads have for many years 
been under close scrutmy by the various State commissions. Many 
States have fixed the passenger rates by statute; and such statutes 
have been attacked and defended before our courts. In a recent 
decision regarding advanced rates the Interstate Commerce Com- 
mission has indicated the opinion that passenger rates should be 
increased. Therefore we proceed on the assumption that passenger 
rates are not too high. Clearly, no satisfactory comparison can be 
made with the freight service. It might be argued that our standard 
of comparison should be the express service rather than the passen- 
ger service proper. This comparison will be examined in detail in 
Chapter VI. Suffice it to say nere that we know of no comprehen- 
sive investigation of the reasonableness of the relations between 
express companies and railroads, and, furthermore, no reliable 
information exists as to the railroad earnings from express trafhc on 
the basis of any unit common to the mail and express service. Abso- 
lutely the only figure which the Interstate Commerce Commission 
could furnish us that we could use as a standard for judging of a 
reasonable mail rate is the average earning j)er passenger-train car 
mile. This is an average derived from statistics compiled regularly^ 
year after year, and not with reference to any particular case. The 
following is the letter received from the secretary of the Interstate 
Commerce Commission on this subject: 

March 24, 1913. 
Hon. Jonathan Bourne, 

Chairman Joint Committee on Transportation of Mail, 

United States Senate, Washington, D. C. 

Dear Sir: Answering yours of the 20th instant inquiring concerning the average 
car-mile revenue for passenger-train service, I have to say that from compilations made 
in the division of statistics of this commission from annual reports of railway com- 
panies for the year ended June 30, 1911, it appears that for what we denominate class 
1 roads, being those whose operating revenues for the year exceeded $1,000,000, the 
average revenue per car-mile from passenger-train service is 25.35 cents; for class 2 
roads, being those having operating revenues for the year below $1,000,000 and above 
$100,000, the corresponding figure is 28.59 cents; for class 3 roads, being those whose 
operating revenues for the year were less than $100,000, the corresponding figure is 
27.45 cents; and for all three classes the figure averages at 25.43 cents. 

Owing to the fact that the reports of car mileage and revenues made to this com- 
mission in the annual reports of common carriers are not segregated with sufficient 
detail to enable us to state the revenue derived from the passenger ser\'ice per car- 
mile, we are unable to comply with the second request contained in your letter. 



EAILWAY MAIL PAY. 87 

To get any reliable information on that point would require a collection of special 
data from the carriers and the analysis and compilation of such data. This would 
be a matter requiring a ^considerable amount of time, for the reason that the carriers 
in their accounts do not make segregations which would enable them to state from 
their present records the figures which you seek. To show precisely what you desire 
would require the setting up of special records by the carriers for a time sufficient to 
furnish reliable data. 
Respectfully, 

G. B. McGiNTY, Secretary. 

MAIL AND PASSENGER CAR -MILE EARNINGS. 

It is to be noted that this average of 25.43 cents (which is very close 
to the average for the five years 1908-1912, inclusive, 25.3 P), is for all 
passenger train cars, passenger, mail, express, and milk taken together. 
It is desirable to have the average for the passenger service, including 
baggage cars, separately, if the passenger service is to be taken as a 
standard. That this, if it could be ascertained, would be above 25.43 
cents, is certain. How much above, can only be approximated. 

The passenger train car miles for 1911 aggregated 3,136,774,476. 
We may take the mail space as in round numbers 260,000,000 car 
miles in 1911 and the express car miles at 312,000,000, the latter 
figure being derived by dividing the average express car-mile revenue, 
22.647 cents, given by the Post Office Department, into the total 
express revenue, which was $70,725,137. Deducting these items we 
have left the passenger train car mileage, excluding mail and express, 
of 2,564,774,476. Dividing this into the passenger train revenue 
with mail and express excluded, yields an §.verage of 26.45 cents. 

This brings us to the question whether the mail service should pay 
the same rate per car mile as the railroad company earns from the pas- 
senger service. The evidence before the committee does not admit 
of an exact appraisal of the difference in the expense to a railroad 
company between the mail service and the passenger service per car 
mile. 

Some members of the committee think the mail revenue should be 
at least fully equal to the paseenger revenue on a car-mile basis. 
From this point of view, as heretofore indicated, it may be noted that 
in practical^ all instances mail carried on railroads is transported in 
pas enger trains. In point of frequencj', speed, regularity, and safety 
mail service is coincident with passenger service. An improvement 
or diminution in passenger service means a corresponding improve- 
ment or diminution in mail service. Therefore anything that tends 
to improve passenger service tends to improve the mail service. All 
expenditures of the railways which tend to develop the passenger 

1 The following figures are obtained by dividing the passenger -train revenues, including mail, express, 
and other passenger-train revenue, but excluding special-train revenue, by the passenger-train car miles, 
including baggage, mail, express, and other passenger-train car miles, but excluding special-train car 
miles. The figures for 1911 differ slightly from the figures given in the letter of the secretary of the Inter- 
state Commerce Commission to the chairman of the joint committee, because certain adjustments were 
made in preparing that letter which it is not practicable to have made at this time for the entire five-year 
period: 

Cents 
per car mile. 

1908 25.52 

1909 25.13 

1910 25. 49 

1911 25. 60 

1912 24.92 

Five-year average (1908-1912) 25. 31 



88 RAILWAY MAIL PAY, 

service effect an improvement in the mail service as well. While 
there are some expenditures in the passenger department of the rail- 
way service that seem at first thought to be exclusively for the benefit 
of the passenger service and not directly beneficial to the mail service, 
yet a close study of the matter will show that all expenditures which 
facilitate the handling of passenger service and improve that branch of 
the service in either frequency, speed, regularity, or safety aid very 
materially, though indirectly, in the development and improvement 
of mail transportation. 

Some persons assert that the mail service is a wholesale trafhc. 
while the passenger ser\/ice is a retail traffic, and for this reason they 
think the mail pay per car mile should be sHghtly less than the pas- 
senger revenue per car mile. It should not be lost sight of, however, 
that although the passenger traffic is in the nature of a retail traffic, 
yet the passenger pays for his service in advance, while the Govern- 
ment pays only at the end of the month, and sometimes after greater 
delay than that owing to controversy over the amount due. More- 
over, the Government penalizes the railroads for failure of service 
and for delays, while no such forfeiture is required in the case of 
passenger traffic. Regulations provide that where interruption of 
traffic occurs, mail shall be given the first opportunity for movement. 
It is also required that mail shall be carried upon fast trains without 
additional compensation, although upon some of the limited trains 
passengers are required to pay an additional fare. 

The final rates agreed upon by our committee are somewhat below 
the level of the passenger earnings, being an average of 24.69 cents 
(ignoring the land-grant deduction, which would reduce this rate 
slightly), as against the 26.45 cents for passenger car-mile revenue 
indicated on page 87. This difference corresponds approximately 
with the difference in expense allowed by the Post Office Department. 
As shown in detail on page 97, the department has presented figures 
estimating that the mail service is 5.78 per cent less expensive 
than the average of the passenger train service per car mile. This 
percentage, deducted from the passenger car-mile earnings of 26.45 
cents, leaves 24.92 cents, as compared with the average of 24.69 
cents, which is the estimated average yield per car mile under the 
rates recommended by the joint committee. 

DESIRABILITY OF UNIVERSAL RATE. 

In most of the discussions before the joint committee it has been 
assumed that whatever mail rate shall be decided upon, it would be 
the universal rate for the whole of the United States, regardless of 
geographical or traffic conditions. This has been the custom 
hitherto in aU legislation on this subject. Obviously a rate that is 
fair for one railroad is not likely to be exactly fair for every other 
railroad. Nevertheless, we find there is a considerable similarity 
in the average passenger train car-mile earnings in various sections 
of the country. It is true that this average is higher for the New 
England States and for the far Western States than for the 
country as a whole, but we have concluded that any attempt to 
adjust for varying traffic conditions would complicate the subject 
with little likelihood of any more accurate or satisfactory adjust- 
ment than will be achieved by the universal rate schedule. The 



RAILWAY MAIL PAY. 89 

schedule which we have recommended automatically takes account 
of differences in lengths of haul, and by making relatively higher 
rates for apartment cars and closed-pouch service than for whole 
R. P. O. cars, will also automatically increase the rates to the 
branch lines and other lines of light traffic. It may be that future 
studies in cost accounting will make it desirable to have a separate 
rate schedule for roads lying in mountainous territory or contending 
with other permanent natural difficulties. But for the present we 
do not think it wise to attempt to change the well-established custom 
of having one universal rate schedule for mail transportation by rail. 



CHAPTER VI. 

COMPARISON OF MAIL AND EXPRESS EARNINGS. 

In a search for a test of the reasonableness of payments made to 
railroads for the carriage of mail, comparison with the railroad earn- 
ings from express is frequently attempted. 

At the outset, we would question the pertinency of such compari- 
son because we have no assurance that equitable relations exist 
between the railroads and express companies. There does not appear 
to have been any comprehensive investigation of that relationship. 
The Interstate Commerce Commission has stated that it has not 
taken the contracts between express companies and the railroads into 
consideration in making express rates . (In the matter of Express R ates, 
No. 4198, 1913, p. 141.) Railroads and express companies are in a part- 
nership, sharing in the gross receipts on a percentage basis. Exist- 
ing contracts between express companies and railroads were entered 
into on the basis of express rates in force prior to February, 1914, at 
which time reduced rates and new conditions were imposed by Govern- 
ment authority. Hence, it would be entirely unwarranted to assume 
that the present payments to railroads by express companies can 
afford any satisfactory basis for comparison. 

Nevertheless, we shall proceed to examine the two services and the 
return to railroad companies from each. 

The express service undoubtedly costs the railroads less than the 
mail per car-mile. Railway employees help to load and unload 
mail but not express matter, except where employees are jointly 
paid by the railroad and express companies. Express companies 
do not have the right to designate the trains they will utilize, but 
the Postmaster General may order mail service on any train. Express 
cars are cheaper than equipped mail cars. Railroad companies are 
Uable for injuries to mail clerks but not for injuries to express employ- 
ees. No fines and penalties, such as the Postmaster General imposes 
on railroad companies, are imposed by express companies. The 
express car carries a heavier load per car mile, but the gross weight 
of the car and its contents is probably less than that of the railway 
post-office car, so that the expense of hauling is probably less per 
car, but this additional tonnage per car necessarily reduces very 
materially the cost of hauhng per ton-mile. Thus, if the cost in the 
two cases be assumed to be 18 cents a car-mile, a load of 3 tons 
of express matter means 6 cents per ton-mile, while a load of 2 tons 
of mail means 9 cents per ton-mile. The arrant absurdity of com- 
paring ton-mile earnings from mail and express without regard to 
the difference in the average load per car must be apparent. 

But there are other and more important dift'erences between the 
mail and express services. Express matter is handled at all times 
by express company employees. A railroad company not only 
handles the mail at and in stations but in a great many instances 
bears the expense of transporting mail between the station and the 
post office. The railroad company furnishes cranes for placing 
mail aboard cars in the smaller towns and supplies trucks for han- 
dling mail at stations in all towns of considerable eize. No such 
service is rendered the express companies. 

90 



RAILWAY MAIL PAY. 91 

Mail must be carried on all trains, including the fast trains, while 
express matter is limited in frequency and s}Deed cf service. 

Express cars are cf simple construction, with practically no fur- 
nishing and require little lighting. Mail cars must be of special 
constructi' n, must be fitted with racks for he Iding mail bags and 
cases for distribution of letters en route. The best practicable light- 
ing is also required in order that mail clerks may be able to handle 
letters rapidly. 

Postal employees are carried free on railroads while on official 
business, whether connected with railroad mail service or not. 
Transportati n cf express employees is reciprocated by free services 
rendered by the express companies for the railroads. 

There are other differences which make the express service less 
burdensome or expensive to the railroads than the mail service. 
The foreg ing enumeration is sufficient, however, to show justifica- 
tion for the statement that a comparison cf rates without a com- 
parison of service rendered is lacking in sincerity. 

COMPARATIVE EARNINGS ON A SPACE BASIS. 

In the hearings comparisons were made on four bases: (1) On a 
space basis — that is, per car-foot mile or per car mile — (2) on a weight 
basis — that is, per ton-mile — (3) according to average rates per hun- 
dred pounds or per package of lesser weight, and (4) on the basis of 
relative increase in the earnings. Our findings on these four bases 
are as follows: 

1. COMPARATIVE EARNINGS. 

For the month of November, 1909, the railroad earnings for hauling 
an express car were sfightly over 23 cents per mile, the exact figure 
given by the railroads being 3.855 mills per car-foot mile, equivalent 
to 23.13 cents per car mile (Hearings, p. 71), while the department 
gave in one place a figure of 3.865 mills (Hearings, p. 1008), but in a 
letter of May 28, 1914, addressed to the chairman of this committee, 
the result was given as 3.848 mills per car-foot mile or 23.088 cents 
per car mile, computed on express revenues reported to the Depart- 
ment by the railroads for the month of November, 1909. A slightly 
lower figure seems to be warranted for the average of the fiscal year 
ending June 30, 1910, than for the month of November, 1909. This 
annual average the department gave in the hearings (p. 1279) as 
3.56278 mills per car-foot mile, equivalent to 21.37668 cents per car 
mile. In checking over the department's figures, Mr. Lorenz discov- 
ered that errors had been made in tabulation, and consequently our 
committee requested the department to recheck its figures, which was 
done, with the result that the department found 3.7745 mills per car- 
foot mile, or 22.647 cents per car mile should be substituted for its 
previous estimate of 3.56278 mills per car-foot mile, equivalent to 
21.37668 cents per car mile. 

To compare with these railroad earnings per car mile from express 
traffic, we must find the mail-car-mile earnings calculated on the 
same basis. This has been given by a joint committee of railroad 
representatives and post-office representatives as 3.37 mills per car- 
foot mile, or 20.22 cents per car-mile. (Hearings, p. 324.) It is 
true that the department has used another figure for the mail earn- 
ings, namely, 4.14 mills (Hearings, pp. 100, 324), but this was for 
only a portion of the space and is not comparable with the express 
figures. We conclude, therefore, that the evidence before the com- 



92 



RAILWAY MAIL PAY. 



mittee relating to the month of November, 1909, shows a decidedly 
lower earning from mail than from express on a car-mile basis. 

2. COMPARATIVE EARNINGS ON A TON-MILE BASIS. 

No accurate information is available on this point. A repre- 
sentative of the railroads gave figures from various sources of 7.4, 
7.7, and 7.5 cents per ton per mile as the average railroad revenue 
from express. (Hearings, pp. 122-123.) The department gives 8.004 
cents as the railroad earning from express per ton-mile. (Hearings, 
p. 1279.) The ton-mile payment for mail transportation, including 
K. P. O. service, has been calculated by the department at 10.04 
cents. (Hearings, p. 852.) But the higher load per car in the 
express service is undisputed. The load per car m the express 
service was given by the department in the hearings (p. 1279) at 
2.57 tons, but this has been corrected in a letter of May 28, 1914, 
to read 2.73 tons, as against a mail load of 2.26 tons per car. Both 
figures are estimates on very uncertain foundations and the quota- 
tion of them here should in no sense be taken as our finding that 
they are even probably correct. But when these loads are multi- 
phed by the ton-mile rates given above (2.73 by 8.004 cents and 
2.26 by 10.04), we get car-mile earnings for express of 21.85 cents 
and for mail of 22.69 cents. These results are in conflict with the 
car-mile earnings for November given above, namely, 22.647 cents 
for express and 20.22 for mail and show the unreliability of these 
statistics furnished us by the department. We conclude that no 
data exist for obtaining decisive results from the comparison of mail 
and express earnings on a ton-mile basis, and that such comparisons 
are worthless unless accompanied by specific information as to the 
load per car. 

3. COMPARISON OF RATES PER 100 POUNDS AND PER PACKAGES OF 

LOWER WEIGHT. 

Fig ares were submitted by the department comparing the average 
payments for mail transportation between specific cities per 100- 
pound and per 40-pound packages, with 50 per cent of the first- 
class express rates recently approved by the Interstate Commerce 
Commission, the 50 per cent being taken as the railroad company's 
share of the earnings. (Hearings, pp. 1272-1277.) The compari- 
son is considerably affected by the length of haul and the size oi the 
parcel taken for comparison, since the express rate per pound is 
less on a 100-pound parcel than on a 40 or a 30 pound parcel. The 
following is an illustration of the range of express rates as the weight 
of parcel varies (I. C. C. In the matter of express rates, rate scale 14) : 



Weight of 
parcel. 


Rate per 
parcel. 


Rate per 
pound. 


Pounds. 
1 


$0.21 
.30 
.40 
.50 
.52 
.54 
.56 
.58 
.60 
.70 
.95 
1.20 


$0. 2100 
.0300 
.0200 
.0167 
.0162 
.0158 
.0155 
.0152 
.0150 
.0140 
.0126 
.0120 


10 

20 

30 

32 

34 

36 

38 

40 

50 

75 

100 



BAILWAY MAIL PAY. 93 

No reliable data are available as to the average weight of an express 
parcel to-day, and without such data a comparison of rates on par- 
cels of specific weights is of practically no value. If the average 
weight be 10 pounds, the revenue per pound will be double what it 
would be if the average be 40 pounds. Comparison of mail revenue 
with revenue from 40 to 100 pound express parcels would undoubtedly 
show that the mail compensation per pound between the selected 
points is in the majority of cases above the 50 per cent of the express 
rates, but no useful conclusion can be based upon uncertain prsmises. 
It seems to have been overlooked by the department (and also by the 
railroad representatives in their discvission of this exhibit) that a com- 
parison of rates between specific points is only another form of a com- 
parison on a ton-mile basis. 

When we are told that between Akron, Ohio, and Pittsburgh, Pa., 
for example, a distance of 132.06 miles, the Government pays 30 cents 
for a 40-pound package of mail whil? the express company pays the 
railroad 26 cents for hauling 40 pounds of express matter, this Is 
equivalent to 11.36 cents per ton-mile for mail and 9.84 cents per 
ton-mile for express. Thus all that has been said on pages 90 and 
92 regarding comparisons on a ton-mile basis would apply here. 
With the average load per car of 2.73 tons and 2.26 tons for express 
and mail, respectively (used here for illustration but not approved), 
the above ton-mile rates become 25.57 cents for mail and 26.86 
cents for express per car-mile, thus reversing the showing. 

We are compelled to reject the department's attempt to show higher 
relative railroad earnings from mail as reckless ?.nd misleading. Any 
comparison with express at this time of experimentation under the 
new rates prescribed by the Interstate Commerce Commission must be 
unconvincing, and it seems clear that when the comparison is made 
before these new rates went into effect, the evidence before us shows 
a relatively higher earnmg from express than from mail, taking the 
railroads as a whole, although several roads admit that per car-foot 
mile their express earnings were less than their mail earnings. (Hear- 
ings, pp. 335 and 526.) 

The Northern Express Co., operating over the Northern Pacific, 
reports that the records of the latter company show that for the year 
ending June 30, 1912, the compensation paid by it to that railway was 
equal to 3.56 mills per car-foot mile, while from the Post Office Depart- 
ment the payments were equivalent to 2.92 mills per car-foot mile. 
(Hearings, p. 744.) These figures are equivalent to 21.36 cents and 
17.52 cents per 60-foot car mile for express and mail, respectively. 
While the express may be somewhat the cheaper of the two services 
for the railroad to perform, the differences expressed in money would 
probably be relatively small. (Hearings, p. 139'5.) 

Suffice it to say that we are convinced that the railroad earnings 
from mail were in 1909 decidedly lower than from express on a car-mile 
basis, which is the best basis for comparison we have. Certainly there 
is no warrant in the oft-repeated assertion that the Government is be- 
ing robbed in its mail payments by comparison with what the express 
companies pa}^. There has iDeen an amazing amount of reckless 
assertion on this subject. 



94 



KAILWAY MAIL PAY. 



4. COMPARISON ON BASIS OF INCREASE IN EARNINGS. 

We have finally to consider the evidence as to the relative growth 
in the total revenues to railroads from these two services. The fol- 
lowing table shows the railroad revenue from mail and express, respec- 
tively, for the 10 years ending June 30, 1912, according to the statis- 
tics published by the Interstate Commerce Commission: 



Year. 


Mail reve- 
nue. 1 


Express 
revenue. 


1903 


$41,709,396 
44,499,732 
45, 426, 125 
47, 371, 453 
50,378,964 
48, 537, 768 
49,391,681 
48,946,052 
50, 702, 625 
50,935,856 
22 


$38,331,964 
41,875,636 
45, 149, 155 


1904 


1905 


1906 


51,010 930 


1907 


57,332,931 
58,692,091 
59,647,022 
67,190,922 
70, 725, 137 
73, 203, 730 


1908 


1909 


1910 


1911 


1912 


Percentage of increase 


91 







1 It will be noted that the figures in this column are not identical with the figures taken from Post Ofl&ce 
Department reports and presented on page 61. The difi'erence is apparently due to the fact that the Post 
Office Department's reports cover all audited expenditures under this item, while the Interstate Com- 
merce Commission reports cover only mail revenues reported to the commission by the railroads. Some 
railroads make incomplete or defective reports. 

This shows a much more rapid increase in the express revenue 
than in the mail revenue received by the railroads. Such a com- 
parison can not be taken as evidence as to the earnings from each 
service per unit of traffic, but it does show that the express payments 
have been responsive to the growth in traffic while the mail payments 
clearly have not. 

Specific comparisons of railroad mail and express earnings were 
submitted by the department near the close of the hearings (pp. 1271- 
1278), and the reply thereto by the railroad representatives (pp. 1334- 
1341) showed clearly that more detailed investigation must be made 
to arrive at any satisfactory comparison of mail and express earnings. 
The Second Assistant Postmaster General himself seemed to feel 
this, for he was unwilling to base his own rates on the results of his 
comparisons. He stated that he at no time said that the railroads 
should be paid only what they received from the express companies 
for handling the express business. (Hearings, p. 1510.) Being 
asked specifically what weight he would attach to the data regarding 
mail and express earnings, he replied, ''I would give this weight to it, 
that I would not increase the rates which we have suggested here" 
(p. 1511). 

As was said in the beginning, we do not regard comparisons with 
the express service as conclusive evidence. The Government should 
pay a just price for every service received. If the relations between 
the express companies and railroads are inequitable to the stock- 
holders of either, perhaps the example thus set by the Government 
will stimulate an examination and rearrangement of the contracts 
between the railroads and express companies. 



CHAPTER VII. 

COMPARISON OF EARNINGS FROM PASSENGER AND MAIL 

TRAFFIC. 

We have indicated in Chapters I and V (pp. 14-15 and 86-88) the 
importance which we have attached to the earnings received by rail- 
roads from the passenger traffic as an indication of what is a just 
rate at the present time. In this chapter we shall review the evi- 
dence submitted to us on this subject. 

In a statement dated January 6, 1911 (Hearings, p. 71), the rail- 
roads' representatives gave the earnings of railroads from passenger 
service proper as 4.417 miUs per car-foot mile and from mail 3.228 
mills. These figures are equivalent to 26.502 and 19.368 cents, 
respectively, pei 60-foot-car mile. 

In his reply, dated January 17, 1913, the Second Assistant Post- 
master General says (Preliminary Report, p. 100) that the depart- 
ment's figures show revenue from mail service of 4.14 mills per car-foot 
mile, and from other services, 4.16 mills. These figures are equivalent 
to 24.84 and 24.96 cents, respectively, for a 60-foot-car mue. The 
cause for these different results was mainly in the treatment of dead 
space, discussed on pages 69-70 of this report. This was plainly in- 
dicated by the joint letter of representatives of the department and 
the railroads, printed on pages 37-38. 

If the 'Mead space" be charged to the mail service, it was agreed 
that the earnings from mail would be 3.37 mills per car-foot mile 
(20.22 cents per car mile), and from other passenger- train services 
taken together, 4.34 mills (26.04 cents per car -mile). 

For individual railroads, comparisons are submitted as follows: 



Service. 



For the Pennsylvania line east and west of Pittsburgh (November, 1909) ( Hear- 
ings, p. 427): 

Passenger 

Mail 

Express 

Total 

For the Atchison, Topeka & Santa Fe (September and October, 1911) (Hearings, 
p. 526): 

Passenger 

Mail 

Express 

Total 

For the Southern Pacific (year ending June 30, 1911) (Hearings, pp. 327-328): 

Passenger 

Mail 



Earnings 

per car-foot 

mile. 


Equivalent 
60-foot-car 
mile earn- 




ings. 


Mills. 


Cents. 


4.473 


26. 838 


3.195 


19. 170 


3.898 


23.388 


4.267 


25. 602 


3.89 


23.34 


3.43 


20.58 


3.28 


19.68 


3.78 


22.68 


5.22 


31.32 


4.05 


24.30 



Are the two services comparable ? The following are the differ-^ 
ences between the two services noted in a statement submitted May 
6, 1913, by Mr. J. Kruttschnitt, of the Southern Pacific Co., so far as 
they are applicable to a space basis (Hearings, pp. 793-794): 



95 



96 



RAILWAY MAIL PAY. 



Mail Traffic. 

Cars must be built according to Post 
Office Department specifications, includ- 
ing post-office features, which diminish 
the paying carrying capacity, and are 
subject to alteration on demand of the 
Post Office Department. 

Entile space on which revenue per car- 
foot mile is based is furnished and main- 
tained by railroad company. 



Our standard 60-foot mail car costs more 
than $10,000 to construct, and is very ex- 
pensive to maintain. The weight of 
standard 60-foot mail car is generally in 
excess of 116,000 pounds. 



The railroads incur extra expense for 
extra switching of mail cars for loading, 
unloading, and advance distribution, in- 
cluding placing and lighting at station a 
considerable time before departure of 
trains. 

Railroads are held liable for personal 
casualties to railway mail employees car- 
ried free, and must also transport agents 
and inspectors of Post Office Department 
without charge. 

Mail must be carried on fastest pas- 
senger trains, mail trains making a higher 
speed than the average for passenger 
traffic. Railroads subject to fine for 
delays. 

Railroads pay for loading and unloading 
cars, and must provide room for mail at 
stations. 



Passenger Traffic. 

No such requirements, and raihoads can 
utjHze entire floor space of coaches for 
seats, with necessary aisles. There is 
also nothing to limit loading of baggage 
car to space capacity. 

As above shown, a large part of the 
space on which passenger earnings per 
car-foot mile are based is furnished and 
maintained by the sleeping-car company 
without cost to railroad companies. Car- 
rying capacity of sleeping cars is less than 
one-half that of coaches, and at least a 
partial deduction of such space is only 
fair when comparing returns per car-foot 
mile with mail, as the railroads are re- 
lieved of ownership and maintenance 
expenses, including depreciation and 
taxes on these cars, and for the further 
reason that the passenger has to pay an 
additional charge to the sleeping-car com- 
pany for the privilege of occupying these 
cars. For passengers in coaches only, the 
revenue per car-foot mile is much in ex- 
cess of that for mail service. 

Our 60-foot steel baggage car costs only 
70 per cent as much as mail car, and weighs 
only about 90,000 pounds, maintenance 
being much less than mail car. Passen- 
ger coaches cost about 10 per cent more 
than postal cars, whilst sleeping cars cost 
twice as much. The latter cars, however, 
are furnished without cost to the rail- 
roads, and the cost to the railroads for 
the average passenger car, including the 
sleepers, which cost them nothing, would 
be 20 per cent less than the cost of the 
60-foot mail car. Coaches weigh some- 
what less than mail cars, but sleepers 
weigh more, the average weight of all 
cars in passenger service being about the 
same as the average for mail service. 

No such expense for passenger service, 
as trains are switched in stations only a 
short time before departure. 



Similar liability is incurred for passen" 
gers, with the important distinction tha^ 
the fares paid reimburse the railroads for 
liability assumed. 

No such liability, and average speed in 
passenger service slower than mail trains. 



Passengers load and unload themselves, 
although accommodations must be pro- 
vided in stations. 



KAIL WAY MAIL PAY. 97 

We have already indicated, on pages 14 and 87-88 of this report, 
our opinion that since speed, regularity, frequency, and safety of mail 
transportation are coinciden t with the same features of passenger trans- 
portation, and practically every expense which improves the passenger 
traffic in these respects is also beneficial in a corresponding degree to 
the mail service, that the mail service should yield the railroads a 
revenue per car-mile prcictically the same as that found to be a rea- 
sonable revenue for the passenger service per car-mile. 

It is true that there are some expenses connected with the passen- 
ger service which do not seem at first thought to be beneficial to the 
mail service, but careful consideration will show that they aid indi- 
rectly in promoting the speed, regularity, frequency, or safety of mail 
transportation. While we believe that the compensation for mail 
should be on practically the sam_e basis as the compersation for passen- 
ger service, the rates we have proposed will yield a som^ewhat lower 
revenue. 

During the hearings the Post Office Department submitted figures 
which indicated that the expeise for mail trar sportation per car- 
mile is 5.78 per cent less than for other passenger- train service. 
The basis for this statement is as follows : 

It gives the percentage of car-foot miles chargeable to mail as 7.09 
(p. 1008). However, after deducting the advertising and other 
traffic expense, it found that the mail was chargeable with only 
6.68 per cent of the operating expense and taxes. In other words, 
the difference (0.41) is the percentage which the excluded expenses 
are of the total. As the 0.41 is 5.78 per cent of 7.09, we conclude 
that in the view of the department the expenses charged to mail are 
5.78 per cent less than the expenses which would have been charged 
if all car-foot miles had been taken as equally expensive. 

As already shown by one computation, the exclusive passenger reve- 
nue is 26.45 cents per car mile. If we deduct 5.78 per cent of this, 
or 1.53 cents, we have 24.92 cents left as the indicated proper rate 
ascertained by this line of reasoning, whereas the rates we recommend 
for adoption give an average revenue of only 24.69 cents per car mile. 
In other words, if it be agreed that the mail service is 5.78 per cent 
less expeiisive than the passenger service, the rates we recommend 
for adoption leave more than this margin of difference. 

Baggage-Car Rates. 

In explanation of a tariff filed with the Interstate Commierce Com- 
mission by certain railroads giving a rate of 25 cents a car-mile on 
privately owned baggage cars for certain distances and 20 cents a mile 
for longer distances, the following statement was offered at the hear- 
ings (p. 1170) by a representative of the New York Central: 

Mr. Rowan. I telephoned to New York this morning and found out that that is a 
rate which is made in connection with theatrical baggage in cases where they do not 
accompany the baggage, but send the baggage on ahead of them, with Sunday inter- 
vening, or something like that. 

The Chairman. That is 25 cents a car mile? 

56211—14 7 



98 EAILWAY MAIL PAY. 

Mr. Rowan. Twenty-five cents a car mile. The same tariff provides a rate of 25 
cents a car mile for empty cars — privately owned cars that are to be transported from 
one point to another in order to take a load or to go from one road to another. 
* * * * * ^ * 

Mr. Rowan, The point I wanted to bring out is the fact that this is an exceptional 
rate and tariff reads in this manner: When unaccompanied by parties, or accompanied 
by parties of less than 10 persons, in which latter case tickets sold at regular first-claaa 
rates must be held by each person, the rate from 1 to 499 miles, 25 cents a mile; from 
500 miles to 624 miles, $124; 625 miles and over, 20 cents a mile; a minimum charge 
of $15, which, after June 1, 1914, will be $25, and the rate will be 30 cents per car mile 
instead of 25 cents, as at present. 

The Chairman. That is an order from the Interstate Commerce Commission? 

Mr. Rowan. Yes, sir; it is a regularly published tariff. 

Mr. Lloyd. Is it true that in the case of a privately owned car being transported 
from one place to another in order that it may be used at some other point, you charge 
25 cents per mile for its transit? 

Mr. Rowan. I am not thoroughly familiar with that. 

Mr. Lloyd. Do any of the rest of you know whether that is the rule or not? 

Mr. Peabody. That is the rule on the Santa Fe. We move empty cars for private 
parties at 25 cents a mile. 

Mr. Rowan. Unoccupied cars, passenger or baggage cars, not in service, owned by 
individuals, theatrical companies, amusement or advertising companies, when moved 
empty, when in charge of porter or other attendants will be charged for at the rate of 
25 cents per mile per car, with a minimum charge of $25 per car, plus one adult indi- 
vidual fare for each porter or attendant. This charge will apply whether or not the 
cars move in service in the first direction. After June 1, this rate will be 30 cents. 

The Chairman, What is the date of that order? 

Mr. Rowan. That will be effective June 1. 

The Chairman. What is the designation of the order? 

Mr, Rowan, It is a tariff and it will be a supplement to New York Central Tariff 
No. 1. 

The Chairman. And goes into effect on June 1? 

Mr, Rowan, Yes, I, C, C, No, 817. The rate in effect to-day is 25 cents per car, 
and new rate 30 cents per car mile, and the minimum charge of $15 will be $25 after 
June 1. 

Senator Weeks. That means that the rate would obtain in each direction? 

Mr, Rowan. In each direction; yes, sir. 

Senator Weeks, And if the car made a round trip the rate would be doubled? 

Mr, Rowan, It will be doubled; yes, sir. 



CHAPTER VIII. 
COMPARISONS WITH THE PULLMAN SERVICE. 

■- The statistics of the Interstate Commerce Comm.ission do not 
permit of a separation of the railroad revenues -collected from per- 
sons riding in Pullman cars-. No accurate railroad car-mile earn- 
ings from the Pullman service can be given. What the passenger 
pays for transportation in the sleeping car goes partly to the rail- 
road company for the mere transportation and partly to the Pullman 
Co. for tiie special services. We are not concerned with the pay- 
ments to the Pullman Co. One should think, however, that the 
railroad company ought to receive somewhat more per car mile for 
hauling Pulhnan coaches than for hauling other passenger train cars, 
because the Pullman coaches aie the heaviest cais in the train. A 
steel sleeping car weighs 73 tons, or from 10 to 13 tons more than a 
steel postal car. Since the passenger miles traveled by persons in 
Pullman coaches are not kept separately from other passenger 
miles, we are unable to state the average number of passengers per 
Pullman car. 

In its report to the Interstate Commerce Commission the Pullman 
Co. shows that the average number of revenue passengers jper car 
day was 12 for the year 1913. The president of the company says 
in a communication to this committee that this might be taken as 
the average number of passengers per car, approximately. How- 
ever, it would seem to be necessarily somewhat high, because all of the 
passengers who get on a car during a day do not necessarily stay with 
that car during its entire trip. We also do not know what average 
fare is paid to the railroad company by passengers riding in Pullman 
cars. But for a very rough approximation we might say that count- 
ing 12 passengers at 2 cents a mile indicates an earning to the railroad 
company of 24 cents per car per mile. Even if this figure could be 
relied upon, the exact return to any railroad company would be 
modified by the nature of the contract it happens to have with the 
Pullman Co. Some companies pay a mileage for the use of the car, 
while others share in the Pullman revenues. The fact that the PuU- 
man Co. repairs its cars, thus relieving the railroad company of the 
care of these cars, must be taken into account. It is frequently said 
that the Pullman fare is generally about one-fourth of the railroad fare. 
As the Pullman Co. in 1913 earned 5.804 cents a car mile, according 
to the report of the Interstate Commerce Commission, this would 
indicate a railroad earning from passengers in Pullman cars of 23.2 
cents per car mile. Accordingly the passengers would pay to the 
is railroad and Pullman Co. together 5.804 plus 23.2 (or 24 cents if this 
taken as the railroad earning), or a total of from 29 to 29.8 cents for the 
use of a Pullman car 1 mile. However, whether the Pullman passenger 
car mile earning be too high or too low is no necessary indication of 
what the mail rate for a car mile ought to be. Each branch of the 
railroad service should be studied and equitable rates should be made 
according to the services performed and the cost of performing them. 

99 



CHAPTER IX. 

ANALYSIS OF THE BILL PREPARED BY THE JOINT COMMITTEE* 

The chief feature of the bill is that the basis of payment is the 
train space occupied by the mails and not the weight of the mails 
carried. The question of space as a basis for mail pay was discussed 
in a previous chapter (p. 63-64). A second feature of the bill, which 
it is believed gives a practical turn to the space idea, is the determina- 
tion of standard units of 60, 30, 15, 7, and 3 feet of space. This idea 
was developed at one of the hearings in a colloquy between members 
of the joint committee, a railroad representative, and an employee 
of the Post Office Department. (See Hearings, pp. 597-598.) 

The purpose of defining standard units is to overcome the uncer- 
tainties that would follow an attempt to measure during a statistical 
period the exact number of feet occupied by the mails. With the 
unit defined it becomes a simple matter for the Postmaster General to 
say to a railroad what and how many units of space are required on 
a given line. The price per unit being stated in the law, there is no 
ground for dispute, the unit being paid for whether it is fully utilized 
or not. On the other hand, if the railway company can not furnish 
the unit asked for, but furnishes a larger unit, it would receive no 
pay for the excess space furnished. It will be seen, therefore, that 
the rates hereinafter recommended are to be judged with the under- 
standing that the major portion, but not quite all, of the space 
actually run, loaded and empty, will be paid for. 

The unit plan, however, is not without its own difficulties. The 
standard full-sized mail car is to be 60 feet in length, inside measure- 
ment. A number of 70-foot cars have been built. If the building 
of 70-foot cars is justified from the standpoint of economy in trans- 
portation, the unit plan would tend to discourage such economy in the 
future. But we are inform^ed that on most roads 60 feet is accepted 
as a reasonable standard for passenger- train cars. Again, we find 
that the railroads now have in use man}^ apartment cars of odd sizes, 
such as 18, 20, and 25 feet. The size of apartments is not easily 
changed because of the location of windows, doors, and interior 
equipment. In the bill the railroads are given the option of stand- 
ardizing the equipment or of accepting a rate of pay proportionate 
to the length of the car requested by the Postmaster General. 

ROUND TRIP AUTHORIZATIONS PROVIDED FOR. 

The bill provides that payments for full-sized post-office cars, 
apartments, and storage cars shall be made for the round trip of the 
car. There is no question about the justice of this in the case of the 
specially equipped post-office cars and apartments. This is in effect 
what is done in the passenger service. Although a passenger pays 
for only the number of miles he actually rides, his fare is fixed upon a 

100 



RAILWAY MAIL PAY. 101 

basis which pays for the transportation of the empty space incident 
to heavier traffic in one direction than in the other. In the figures 
given on page 87, it is shown that the revenue from passenger service 
proper is 26.45 cents per car-mile. This computation is made not 
merely upon the car space actually occupied by passengers, but the 
entire car space haaled whether occupied or not. 

If used by the Government in one direction only, R. P. O. and 
apartment cars must be returned without being of any use to the 
railway company. In the case of the storage cars, however, round- 
trip authorizations were a matter of debate with us. The argument 
may be made that since storage cars are not a specialized equip- 
ment, except to a slight extent, where stanchions are supplied, they 
may be used on the return movement by railroad companies. 

If the Government pays for a storage car on a round trip, the rail- 
way company is not allowed to use it, and it might seem as though the 
bill as worded will encourage empty haulage. The remedy would 
be to make a shigle trip loaded movement rate based on the average 
amount of empty return haul occasionea by the mail service. We 
had, however, no accurate record of this average empty return that 
could not be utilized by the railroads, and it seemed best to leave the 
rate and authorization for the round trip with the proviso that by 
mutual agreement with the railroad the Post Office Departm^ent may 
pay for single trips only. 

It should be remarked, however, that where mail traffic is heavier 
in one direction than in the other there is usually a corresponding 
dijfference in passenger, baggage, and express transportation, so that 
as a rule where storage mail cars are to be returned empty the rail- 
road company is also hauling empty return baggage and express cars, 
and would therefore be unable to use to any great extent the empty 
storage mail cars. 

RELATIVELY HIGHER RATE FOR SHORT HAULS. 

The rates are so arranged that short hauls will receive a relatively 
higher average compensation than long hauls per mile. The ter- 
minal expense of a 60-foot car is the same for a short haul as for a 
long haul. This adjustment is accomplished by having a terminal 
rate separate from a line rate. Take, for example, a full R. P. O. 
car run of 100 miles as compared with one of 200 miles. The ter- 
minal rate, being independent of the distance, is alike in both cases, 
namely, $8.50 for a round trip, or $4.25 each way. The line rate 
being 21 cents a mile, the line charge for the 100 miles is $21, and 
for the 200 miles, $42. The total payments, line and terminal charge 
combined, would thus be $25.25 and $46.25, respectively, making 
an average payment per mile for the 100-mile trip of 25.25 cents per 
car mile, and 23.125 cents for the 200-mile trip. For a 300-mile run 
the average rate per mile would be 22.42 cents for the R. P. O. car, 
and for 1,000 miles 21.425 cents. 

EXPLANATION OF RATES. 

We now proceed to an explanation of the rates themselves. W© 
have discussed on pages 14-15, 86-88, and 95-97 the controlling im- 
portance of the average passenger train revenue per car mile and 



102 



RAILWAY MAIL PAY. 



the statistics of cost before the committee. The committee's bill, 
we think, will produce an average rate of approximately 24.69 cents 
per 60-f oot-car mile, before deductions for land-grant routes are made. 
The exact payment per car mile will depend upon what authoriza- 
tions the department will make for the various units. 

This rate, however, as has been explained above, varies for the 
different lengths of haul, and it has also been made to vary by making 
the rate for fractions of cars relatively higher than for full cars. 
The schedule of the rates is given below: 



Class of service. 



Terminal charge, irrespec- 
tive of distance. 



Round trip. Single trip 



Line charge 

per unit mile 

run. 



60-foot R. P. O. car 

Storage cars 

30-foot apartment.. 
15-foot apartment.. 
Closed pouch: 

7 feet 

3 feet 



$8.50 
8.50 
5.50 
4.00 

1.00 
.50 



S4.25 
4.25 
2.75 
2.00 

.50 
.25 



Cents. 



21 

21 

11 

6 

3 



The table presented in Chapter I, page 19, shows the estimated 
relative importance of the various classes of service and of the total 
terminal as compared with the total line compensation. It will be 
noted that the total terminal compensation is 11.65 per cent of the 
total compensation. 

For the R. P. 0. and storage cars tlie terminal expense is relatively 
less important than for the apartment cars and closed-pouch service, 
because the average length of haul is less in the case cf the latter. 
The average line rate is 21.82 cents. The line rate is less for 60 feet 
cf space in the full R. P. O. service than for the same amount of 
space in the apartments. This appealed to us as fair en the whrle.-ale 
and retail principle. When fractions cf cars are authorized by the 
Post Office Department, there is certain to be some waste of space, 
because it occasionally happens that a company must run an addi- 
tional car to supply an apartment. On the other hand, it will 
happen that the department will utilize space for which the com.- 
pany has no other use. The testimony was not conclusive on this 
point, but we were further influenced by the consideration that the 
apartment cars will predominate on the railways of lighter traffic. 

The following table shows the line rate prorated to a 60-foot ba^is 
for each of the units and indicates how the line rate increases with 
the decline in the size of the unit. The same result, but on a different 
principle, is to be observed in the construction of the terminal 
charge, except that the closed pouch is on a lower basis than the 
apartments for 60 feet of space. This is explained by the fact t at 
no extra switching is occasioned by closed-pouch service. 



EAILWAY MAIL PAY. 
Joint committee rates on 60-foot basis. 



103 





Rate per unit. 


Average 
distance 
as tabu- 
lated.! 


Average rate on 60-foot basis. 


Unit. 


Terminal 
(roimd 
trip). 


Line. 


Terminal 
(single 
trip). 


Line. 


Terminal and line combined. 




For 
average 
distance. 


For 

100 

miles. 


For 
1,000 
miles. 


60-foot R. P. 

60-foot storage 


$8.50 
8.50 
5.50 
4.00 

1.00 
.50 


Cents. 

21 

21 

11 

6 

3 
1.5 


Miles. 

301 

556 

185 

80.5 

} 34.5 


$4.25 
4.25 
5.50 
8.00 

/ 4.29 
\ 5.00 


Cents. 

21 

21 

22 

24 

25.7 

30 

2L82 


Cents. 
22.41 
2L76 
24.97 
33.94 

38.13 
44.49 
24.69 


Cents. 
25.25 
25.25 
27.50 
32 

29.99 
35 


Cents. 
21.42 
21.42 


30-foot apartment 

15-foot apartment 

Closed pouch: 

7feet 


22.55 
24.80 

26.1 J 


3 feet 


30.50 


All units 



















^Average distances (especially in case of 60-foot R. P. O.'s) are too low, because tabulation was made 
by R. P. O. routes and not on the operating run of the cars. If the 60-foot R. P. O. average rim is 400 miles, 
the 22.41 would be changed to 22.06 cents. 

The terminal charge was constructed as follows: A study of the 
actual movement of mail cars reveals the fact that very generally 
railway post-office cars are placed on tracks accessible to m ail clerks a 
considerable time before the departure of the train. This requires 
extra switching. The terminal charge is m-ade primarily to cover 
the switching and cleaning of the car. Realizing that conditions at 
terminals vary tremendously, we have been compelled to approxi- 
mate an average condition, and in the construction of the rate table 
it was assumed that there are in the case of an R. P. O. car during a 
round trip, six switching movements, two of them being the special 
movement of placing the car for advance distribution of mail and the 
other four movement-s due to the fact that any passenger-train car 
must be put into a train to begin the run, must be switched out at 
the completion of the one-way trip out, m^ust be placed in the train 
on the trip back, and out of the train again into the yard. For 
each switching movement $1.25 is allowed. We find that there are 
switching charges in the freight tariffs as low as $1, and even lower, 
but in cases before the Interstate Commerce Commission, where 
switching charges have been investigated, we find that $3 and more 
has been frequently approved. 

However, there is a considerable difference between freight car 
switching and mail car switching. A mail car weighs moie than 
three empty freight cars, and mail cars must be switched, at least 
for the advance distribution, singly, while freight cars a^ e generally 
handled in cuts consisting of a number of cars. A study of the 
actual number of minutes required in switching movements will 
show that the SI. 25 is too low rather than too high. 

A study of 13 single- trip full R. P. O. car movements on the 
Baltimore & Ohio, made for us by Mr. J. C. McCahan, jr., supervisor 
of mail traffic of that railroad, indicates that at important terminals 
our terminal allowances are too low. After noting the actual number 
of minutes during which switch engines were used in switching mail 
cars, and allowing for such time at $4 per switch-enguie hour, and 
adding the actual cost of cleaning and the cost of the gas consumed 
in lighting the cars while clerks are making the advance distribution. 



104 RAILWAY MAIL PAY. 

the average per single trip amounted to $4.58, as against the $4.25 
which we have allowed for the 60-foot car. The six movements at 
$1.25 amount to $7.50. To this we add a cleaning charge for the 
round trip of $1, making $8.50 in all. In the case of the 30-foot 
apartment, the special mail switchings again are taken as two in 
the round trip, but the mail, since it occupies but haK the car, should 
be charged with only one-half of the other four switchings. The 
total four switchings at the rate of $1.25 amount to $5, to which is 
added one-haK the cleaning charge, making a total of $5.50. By 
the same process the 15-foot apartment terminal charge is made $4 

The storage car is given the same rate as the E. P. O. car. This 
is an arbitrary, as we were unable to make a satisfactory appraisal 
of the differences in the two classes of cars. The storage car with 
its load will weigh less than the R. P. O., but it costs less to build 
and equip, and it is not so well lighted. On the other hand, there is 
a greater tonnage of mail matter carried in the storage car, and this 
requires more labor for loading and unloading per car. 

The loading and unloading of mails has been included in the line 
charge and not in the terminal charge, since, in making a rate on the 
car basis, it must be remembered that mail is not merely loaded and 
unloaded at its beginning and end of the runs, but also continuously 
along the line. The amount of loading and unloading is thus not 
independent of the distance. From this point of view any particu- 
lar railroad station is a terminal for those cars only which originate 
or terminate at that point, while for all cars passing through such 
station is regarded as incidental to the line run. This view is con- 
sistent with the car-mile unit of payment. To be sure, loading and 
unloading is not strictly proportional to the distance run, and the 
more accurate method would be to have a separate factor in the rate 
based on the total weight loaded or unloaded in any car run, but 
this would involve a weight-space basis and would complicate the 
problem more than is necessary for substantial justice. 



CHAPTER X. 

GOVERNMENT OWNERSHIP OF R. P. O. CARS. 

The American people have great respect for and obedience to laws. 
They have the highest regard for their Government and its different 
branches. There has been a growth of confidence, almost to the 
extent of belief in the infallibility of heads of departments and 
bureaus in the administrative branch of our Federal Government. 
This is probably due to the fact that most of the information rela- 
tive to governmental operations emanates from the departments in 
the various reports m.ade by the department heads annually to 
Congress, and the further fact that the people are seldom brought in 
personal touch \\ith the heads and have no direct voice in their 
selection. For these reasons the department heads should be sure 
of the soundness of their premises and correctness of their conclu- 
sions before venturing to make a specific statement vv^hich might 
Jesuit in shaking the confidence of the people in the reliability, in- 
tegrity, or intelligence of Governm-ent management. 

In 1887 the then Postmaster General, Hon. William F. Vilas, in 
his report regarding R. P. O. car transportation, gave credence to 
the idea that the Governirient v>^ould be a gainer to the extent of a 
million and a half dollars per annum by purchase, ownership, and 
operation of the R. P. O. cars rather than by a continuation of the 
present system of paying the railroads for supplying, equipping, 
maintaining, and hauling the railway post-office cars. 

Such a statement unexplained and unrefuted naturally plants in 
the minds of the individuals cognizant of said statement the seed of 
suspicion as to the intelligence or honesty in two branches of Gov- 
ernment, the legislative and administrative. 

Eliminating for the present the question as to the desirability or 
nondesirability of Government ownership as a pubhc policy, we will 
deal specificaUy with the question itself on a purely commercial line 
and try to ascertain and dem )nstrate what, if any, truth there be in 
the statement made by Mr. Vilas. 

As has been previously stated, railway-mail transportation under 
the present system is paid for in two classes, a payment according to 
the weight of the mail carried and payment for the use of railway 
post-office cars. A rate based on weight contemplates the transpor- 
tation of the mail in cars loaded to their normal capacity. This, in 
the early days of the Post Office Department, was the principal 
service performed by the railroads. The development of modern 
business methods increased the importance of rapid transportation 
and delivery. Although in former times it was entirely satisfactory 
to have the mail hauled on the trains in bulk and sorted and dis- 
tributed at junction points or post offices, the demand for more 
rapid service made this entirely inadequate. Out of this demand 
for a more rapid ssrvice grew the railway post-office car, which is 
practically a post office on wheels. By the use of such a car railway 
clerks are enabled to distribute mail en route, not only distributing 

105 



106 RAILWAY MAIL PAY. 

it as to the different branch roads upon which it is to go, but also 
distributing city mail by carrier routes so that there shall be no 
delay whatever at junction points nor in cities where the mail is to 
be delivered. 

The performance of such service on board the train requires the 
equipment of cars with a special apparatus, particularly racks for 
holding m-ail bags and distribution cases for the sorting of letters. 
The necessary result of this requirement is that instead of containing 
8 to 12 tons of mail, which an ordinary car will hold, the amount of 
mail actually carried in a railway post-office car averages only 
2.26 tons. In other words, the Post Office Department not only 
requires the transportation of mail but requires the transportation of 
largely empty cars used for the sorting of mails en route. 

The general assumption is that when the Government pays the rail- 
roads for the transportation of a certain quantity of mail ascertained 
by weight, the only additional amount that should be paid for the use 
of a special car would be one based upon the extra value of the car 
itself. The fact is, however, that the extra cost imposed upon the 
railroad company is not due so much to the extra cost of the car as to 
the extra cost of hauling the additional car space. 

An illustration based upon transportation more familiar to the 
average citizen will indicate the difference in service rendered in 
transporting mail in cars loaded to their capacity and in cars loaded 
to one-fourth of their capacity. 

Let us suppose that a farmer is shipping his apples to a distant 
market and is paying the regular ton rate for car lots. Then, owing 
to circumstances which make it extremely important that imme- 
diate transportation of the apples be secured, the producer desires 
to save the time in which the apples are in transit and asks the rail- 
road compauy to supply cars in which the apples can be sorted 
while on the road. The space required in the cars for sorting the 
apples into different grades makes it impossible to carry more than 
one-fourth of the quantity theretofore conveyed. Necessarily, the 
railroad must have increased compensation for providing and haul- 
ing the extra oars necessary in order to convey the apples in the 
small lots made necessary by sortr^g en route. In the illustration 
thus presented, the producer would not be merely paying for extra 
car space but for the hauling of that space over the railroad. 

In the case of the transportation of mail in specially equipped 
railroad post-office cars, the additional payment is not merely for 
the use of the car space, but for the hauling of the space over the 
railroads. If the Government itself should own the cars, it would 
have no more right to ask the railroads to haul them with only 
2 or 3 tons of mail therein at rates fixed for the transportation of 
mail. in bulk than the apple producer would have to require the 
railroad company to haul sorting cars owned by him at the ton 
rate fixed for the transportation of apples in bulk. 

WOULD INCREASE EXPENSE. 

Our study of the subject has convinced us that Government owner- 
ship of post-office cars is entirely impracticable and would be much 
more expensive to the Government than the present system of com- 
pensation. At present the railroad companies own the cars and pay 
all the expense of heating, hghting, repairing, painting, cleaning, 



BAIL WAY MAIL PAY. 10 7 

inspecting, furnishing ice water, etc. If the Government owned these 
cars, which would be scattered throughout the United States, it would 
be compeUed to employ skilled inspectors to guard against deve<op- 
ment of defects w^hich would render the cars unsafe, would employ 
cleaners and arrange for heating and lighting, would maintain repair 
shops and employ expert mechanics. We do not believe that any 
person of business experience will doubt for a moment that to main- 
tain the comparatively few R. P. O. cars used in the Railway Mail 
Service would cost the Government many times what it costs the 
railroads. Nor do we believe that anyone, after giving the subject 
con.^ideration, mil contend that the railroads should be required to 
haul such GovernrnxCnt-owned cars without additional compensation 
for the ser^'ice rendered. 

In our investigation of this subject, we have been unable to secure 
statistics as definite and complete as we desired. Neither the 
Interstate Commerce Commission, the Post Office Department, nor 
the railroads have given the subject the investigation necessary to 
procure definite data. Yet we are convinced of and believe vv^e can 
demonstrate the absolute fallacy of the contention that the Govern- 
ment could piofitably own the railway post-office cars. 

According to tariffs filed with the Interstate Commerce Commission, 
we find that on one-way movements for special passenger cars, 
including advertising, agricultural, amusement, antituberculosis, 
dental, exhibition, industrial, photographic cars, etc., the rate per 
car mile for occupied cars ranges from 40 to 60 cents and for un- 
occupied cars from 25 to 30 cents on the following lines: Atlantic 
Coast Line, Baltimore & Ohio, Burlington, Great Northern, L. S. & 
M. S. (New York Central), Missouri Pacific, New York Central & 
Hudson River Railroad, New York, New Haven & Hartford Railroad, 
Pennsylvania Railroad, Seaboard Au* Line, Southern, Southern 
Pacific, and Union Pacific. Of these railroads, the Atlantic Coast 
Line, Seaboard Air Line, and Southern charge other lines for hauling 
their unoccupied cars 25 cents per car mile. 

While the reasonableness of these charges has not been passed 
upon by the Interstate Commerce Commission, the fact that no 
effort at reduction has been made indicates that the rates are reason- 
able. The Interstate Commerce Commission has not seen fit to 
question the reasonableness of such rates. 

Therefore it may be assumed that if the Government owned the 
R. P. O. cars and called upon the railroads to transport them on pas- 
senger trains with such mail as the Government might place therein 
the rate would be in the neighborhood of 25 cents per mile, less prob- 
ably the interest on the cost of the car plus the average cost per annum 
of general and running repairs and depreciation, providing the Govern- 
ment itself paid for the general and running repairs for its own cars. 

Reports received by this committee from 14 of the railroads having 
the largest mileage of mail service give an estimated average cost per 
annum of $1,319.87 for general and running repairs, and $335.91 for 
depreciation for each R. P. O. car. The 60-foot steel R. P. O. car 
costs about $12,000, the annual interest on which, at 6 per cent, would 
be $720. The average run of these cars is about 105,620 miles per 
annum. The total of the three items of expense above enumerated 
is $2,375.75. Dividing this by the number of miles the car travels, it 
will be seen that the expenses average 2.25 cents per mile, which 



108 RAILWAY MAIL PAY. 

would properly be deducted from the 25-cent haulage rate mentioned 
above. 

In other words, if the Interstate Commerce Commission should de- 
termine that the railroads were entitled to receive the same haulage 
rates for Government owned, maintained, and repaired R. P. O. cars 
as now charged by somie roads as between themselves and representing 
a minimum single-trip charge as between the railroads and the public 
on unoccupied passenger cars, and if some person or persons should 
present the Government with a complete line of S 12,000 R. P. O. cars 
and should pay for the expense of general and running repairs and for 
depreciation, which according to the above estimates would aiTiount 
to 2.25 cents per car mile, and the Interstate Commerce Commission 
should make that deduction from the 25-cent car-mile haulage rate 
allowed the railroads for haiding the Government-owned cars, it would 
cost the Government, and the railroads would receive, 22.75 cents per 
car male for hauling said cars. But if the Government bought and paid 
$12,000 for every 60-foot steel R. P. O car and it cost the Government 
no m.ore than it does the railroads for general and running repairs, 
which supposition is absurd on its face, then the deduction that v/ould 
be made on the car-mile revenue basis that might be allowed the rail- 
roads by the Interstate Commerce Commission would only be the 
difference between the rate of interest paid by the Government, say 
3 per cent, and the rate of interest paid b}'^ the railroads, say 6 per 
cent, on borrowed money applied to the car-mile basis, or a reduction 
of 3.41 mills, plus a 5-mill car-mile reduction for maximum annual 
depreciation per car. This would make over 24 cents instead of the 
22.75 cents that the Government would probably have to pay the 
railroads according to the above line of reasoning. 

Yet to-day, under present methods, the railroads are receiving a 
total of only 21.579 cents per car-mile for operating a 60-foot R,. P. 0. 
car carrying the average load. This statement is based on the fol- 
lowing premises and deductions : 

In House Document No. 105, page 196, it is shown that the mail 
routes carrying over 5,000 pounds a day have 423,666,000 car-foot 
miles of full R. P. O. service out of a total of 431,000,000, or 98.2 
per cent of the entire full R. P. O. car service. On page 37 of the same 
document it will be found that the routes carrying 5,000 pounds a 
day or more receive R. P. O. pay to the amount of $4,631,000 out of 
a total of $4,697,000, or 98.6 per cent of the total. Therefore, the 
routes carrying 5,000 pounds or more daily embrace over 98 per cent 
of the car miles and over 98 per cent of the compensation for full 
R. P. O. cars. 

Turning to page 852 of the hearings, the Post Office Department 
statistics show that the routes carr5ring over 5,000 pounds a day 
receive for transportation pay (weight pay) $33,845,070.62. The 
same table shows that the same routes carried 474,816,564 tons 1 
mile. Dividing the latter into the former, we obtain an average rate 
of 7.128 cents per ton per mile. On page 1279 of the hearings there is 
a statement from the Post Office Department giving a density of load 
of 2.26 tons per car. Multiplying 7.128 cents by 2.26 tons, we obtain 
a product of 16.109 cents as representing the average pay to the rail- 
road company from the weight of mail contained in the R. P. O. car. 
But in addition to this, the railroad company receives a. space rate 
which, for a 60-foot car, is stated in the law as $40 per mile of route 



RAILWAY MAIL PAY. 109 

for one trip each way (one round trip) daily. The service to be per- 
formed to earn this $40 is to run an R. P. O. car 1 mile each way 
daily, or twice 365 days, making 730 trips per annum. Dividing 
730 trips into $40, we obtain an average earning per car mile of 5.47 
cents for the additional space occupied by R. P. O. equipment, as well 
as for the hght, heat, sanitary attention, etc. 

Adding this extra-space pay, 5.47 cents, to the pay for the average 
weight carried, 16.109 cents, we find a total of 21.579 cents as repre- 
senting the present pay per car mile to a railroad company for fur- 
nishing and operating a 60-foot R. P. O. car, carrying the average 
load. 

Taking the rates in our suggested bill for a 60 foot R. P. O. car, 
$8.50 for the terminal round trip and 21 cents for the line rate, with 
an average run per car of 301 miles, according to data furnished by 
the Post Office Department, concerning the correctness of which we 
have grave doubts, we would have a rate of 22.41 cents, being a 
combination terminal and line rate of 22.41 cents for each car-mile 
according to the department's estimate of the average distance run 
by R. P. O. cars. 

Thus it will be seen that our own suggested rates are below the 
rate that the Interstate Commerce Commission might alJow on the 
line of reasoning and deduction set forth in this argument. But 
some members of our commission have grave doubts whether in our 
suggested rates the line rate on the 60- foot R. P. O. and 60-foot 
storage cars are sufficiently high. Hence, we have included in our 
suggested bill section 7 in order that after two years' practical oper- 
ation and reliable information with resultant ascertainment, should 
the rates be found too low. Congress can raise them, and should they 
be found too high, which in our opinion will not be the case, then 
Congress may lower them. 

UNWISE AS PUBLIC POLICY. 

In the foregoing discussion of the subject of Government ownership 
of R. P. O. cars we have disregarded the subject of Government owner- 
ship as a general public policy, and dealt only with the question of 
economy to be effected. We believe that it would not only be expen- 
sive for the Government to own the cars, but believe it unwise because 
it would be the beginning of a general Government ownership policy, 
eventuating in bureaucratic paternalism, inertia, and, inside of a 
century, governmental dissolution. Government ownership of part 
of the railway cars would soon be followed by ownership of the rail- 
roads themselves, telephone and telegraph companies, express com- 
panies, and electric and water means of transportation. 

Up-to-date statistics are not available showing the number of em- 
ployees in these different services, but the following are presented 
for the years indicated, being the latest that can be obtained : 

1914, number of Government civil employees 469, 000 

1912, telephone and telegraph employees 220, 656 

1913, railway employees 1, 815, 239 

1912, electric and street railway employees 282, 461 

1906, water transportation 188, 348 

1907, express employees 79, 284 

Total ' . . 3, 054, 988 



110 RAILWAY MAIL PAY. 

Under Government ownership and operation there would be over 
3,000,000 governmental employees. 

Taking into consideration the fact that in the last 10 presidential 
elections the President has been elected by a plurality varying from 
7,000 plus to a little over 2,500,000, the thought naturally arises 
that 3,000,000 governmental employees could absolutely control the 
Government under our political machinery, the tendency being more 
pay, less service in governmental employment, resulting in resistless 
efforts on the part of outside labor to secure Government employ- 
ment because less onerous and more remunerative, with accumulative 
dissatisfaction and irritation in all private enterprise. 

Two years ago in the parcel-post study it developed that the express 
companies had over 79,000 employees receiving an average wage 
scale of less than $50 per month, while the postal employee perform- 
ing a similar service received an average of $93 per month, demon- 
strating that under Government ownership and operation of express 
companies the wage scale would cost the Government, conservatively 
speaking, $30,000,000 more for operation in labor payments than it 
did the express companies. 

Governmental efficiency and economy of operation can never equal 
that of private enterprise, and. the whole desiderata of Government 
should be equal legal opportunity for all and limitation on individual 
liberty onlj' in the prohibition of preying on the personal or property 
rights of others. Our present drift to departmental rule and regula- 
tion, instead of a government by law, which is the greatest menace to 
the future of our country, would, in our opinion, be greatly accen- 
tuated by governmental ownership. 



CHAPTER XI. 
INADEQUACY OF DEPARTMENTAL DATA. 

Before closing this report, we deem it our duty to inform Congress 
that our work has been greatly handicapped by a deplorable lack of 
definite information in the Post Office Department regarding its 
own operations and by the attitude of the representatives of both 
the Post Office Department and the railroads. On both sides there 
has been a persistent tendency toward special pleading. From 
the beginning, the railroads have been opposed to adoption of space 
as a substitute for weight as a basis for mail compensation. On the 
other hand, the Post Office Department has evinced a determination 
to secure a reduction in the total amount of railway mail pay, with 
little, if any, regard to whether such a reduction is justified or not. 

Justification for this criticism will be found in the repeated changes 
the department has m^ade in its plan, with the ultimate result that 
it concedes the error of its original contention that the railroads aie 
overpaid to the amount of $9,000,000 per annum. Seemingly the 
chief desire of the departm.ent has been to effect a reduction in ex- 
penditures which would show a surplus in the operation of the Postal 
Service, and in the accomplishment of this they appear to have deemed 
railway mail compensation the easiest place to make a reduction. 

Representatives of the railroads are open to a similar criticism. 
A reading of the evidence will show that they were either not in 
possession of very definite data or they were reckless in their com- 
putations showing the amount of underpayment they believed 
existed. Their estimates of underpayment varied from fifteen mil- 
lions to thirty-eight millions. 

While we regret to criticize any branch of the Government and it is 
unpleasant to believe that public business affairs are carelessly con- 
ducted, yet we believe that the country and Congress are entitled to 
know the facts. We would hesitate to discuss this subject, if our 
own experience were unique, but in the course of our work we have 
learned that other commissions which have studied postal problems 
have had similar experiences and that the formation of satisfactory 
conclusions by them was made difficult or impossible by the unre- 
liability and inadecfuacy of statistics furnished by the Post Office 
Department regarding its own activities. 

As already stated herein, the subject of railway mail pay was 
studied by a congressional commission from 1898 to 1901. While 
the result of that commission's work was under consideration in the 
House, Congressman Moody, of Massachusetts, afterwards justice of 
the United States Supreme Court, declared in an address in the 
House of Representatives that during hearings before the commis- 
sion the Post Office Department submitted statistics showing that 
the railroads were paid on an average 6.58 cents per pound for trans- 
porting mail, averaging 40 cents per ton-mile, with an average haul 

111 



112 RAILWAY MAIL PAY. 

of 328 miles, whereas a special weighing demonstrated that the aver- 
age payment was, in fact, 2.75 cents per pound, averaging only 12.56 
cents per ton-mile, with an average haul of 438 miles. Comment- 
ing upon these statistics. Congressman Moody said : 

In other words, we were not paying one-third as much as the Post Office Depart- 
ment had led the people of the country to believe we had been paying. 

yery similar was the experience of a commission appointed in 1911 
to investigate the subject of postage on second-class mail matter, of 
which commission Justice Hughes, of the Supreme Court, was chair- 
man. Repeatedly the statistics submitted by the Post Office Depart- 
ment were shown to be erroneous, and the depart rent changed its 
figures when compelled to do so by the demonstration of their inac- 
curacy. So numerous and so glaring were the errors that the com- 
mission commented upon some of them as follows : 

It seems hardly worth while to include subsidiary tables from which these results 
are taken or to criticize the details, as the commission has little confidence in their 
accuracy. 

Tiie Hughes Comaiission also said in its report, in commenting upon 
the effort of the Post Office DepaT-tment to present statistics showing 
a proper apportionment of general post-office expenses to the different 
classes of mail: 

In view of the errors and inconsistencies in which the returns of the post offices 
abound (we do not extend this report to review them), our examin< tion has convinced 
us that the computation is not sufficiently accurate to base an apportionment of the 
cost of the general post-office service. 

Having before it this record of unreliability of departmental statis- 
tics, this committee could not, with due rega'd to the fulfillment of 
its duties, accept the depaitm.ental statistics as accurate and reliable 
unless independent investigation and checking from other sources 
confirmed the figures the depaitment had given. 

Tiie inadequacy of the statistics is no imore subject to criticism, 
howeve:, than the seeming lack of frankness with which the depart- 
ment prepared stat'stics for submission to Congress and to this and 
o t h e r c o mm iss io ns . 

A number of errors have been found in the statistics submitted 
by the Post Office Department relative to the service properly 
chargeable against the Government for railway mail transportation. 
It is singular that in most instances these figures have erred on the 
side of indicating the possibility or desirability of a lower compen- 
sation for carrying mail. Usually when the Post Office Department 
has been compelled to revise its figures, that revision has resulted 
in a showing more favorable to the claims of the railroads. In any 
fair effort to present statistics, it would be reasonable to expect that 
errors would occur on one side as frequently as on the other. 

DEPARTMENTAL VACILLATION. 

One of the first instances of vacillation in figures submitted to the 
joint committee by the department was that in regard to oveV-pay 
of the railroads. In Document No. 105, Postmaster General Hitch- 
cock recommended for enactment by Congress a bill incorporating 



KAILWAY MAIL PAY. 113 

a plan which he recommended as ''scientific and businesshke," and 
which he said would save the Government $9,000,000 per year. His 
statement was based upon a report made to him by a committee 
of his department, of which committee the Second Assistant Post- 
master General, Hon. Joseph Stewart, was chairman. The original 
statement was made on August 12, 1911. The enactment of the 
Hitchcock plan was recommended not only by Postmaster General 
Hitchcock, but by his second assistant, Mr. Stewart. These two 
officials earnestly urged the enactment of that bill until January 9, 
1913, when the Postmaster General advised this committee that 
he recommended three changes, two of which vitally changed the 
original plan. Mr. Stewart stated in his testimony, a few days 
later, that the modifications recommended by the department would 
practically eliminate the alleged $9,000,000, thus virtually admitting 
that the original statement, indicating an overpay of $9,000,000 
annually, was not justified. 

More than a year afterwards, to wit, January 16, 1914, Second 
Assistant Postmaster General Stewart informed the committee at a 
hearing that the $9,000,000 estimate made by the Postmaster General 
was an error and that it should have been $10,531,792, a difference 
of over a million and a half dollars, which sum would represent the 
intended original estimate of the department as to the amount ot 
overpay of the railroads. In the same brief in which this correction 
of figures was made the department presented a table of statistics 
which will be found on page 996 of the committee hearings, which 
concludes with the statement that the excess of revenues of railroad 
companies from mail transportation exceed the apportioned cost 
under the second or modified plan to the amount of $1,616,532 for 
the year 1910, which amount would represent the overpa3niient to 
the railroads as estimated by the department. But in a foot note 
computations are made and it is estimated that the overpayment for 
1913 would be about $319,832, and by a computation made on April 
3, 1914 (Hearings, p. 1498), the statement is made that — 

These new figures which we submit to the joint committee for consideration pro- 
duced instead of that surplus ($1,616,532) a surplus of $221,832 over all fair charges 
of cost against the department. 

It will thus be seen that the committee had before it estimates 
from the department of annual overpayments to the railroads to the 
amounts of $9,000,000. $10,531,792, $1,616,532, $319,832, and 
$221,832. 

An amazing feature of this wavering record above described is found 
in the confhcting statements of the Second Assistant Postmaster Gen- 
eral and his chief regarding the alleged saving that could be made by 
the adoption of the plan of railway mail pay recommended in Docu- 
ment No. 105. It will be remembered that Document No. 105 was 
prepared by a committee of department officials of which Second 
Assistant Postmaster General Stewart was chairman. In his letter 
transmitting that document Postmaster General Hitchcock said: 

The committee estimates that through the readjustment of railway mail pay on the 
basis of cost with 6 per cent profit a saving to the Government could be made of 
$9,000,000. 

56211—14 8 



114 RAILWAY MAIL PAY. 

Commenting upon this statement, Second Assistant Postmaster 
General Stewart said, in his brief transmitted on January 16, 1914: 

Unfortunately for the accuracy of the matter the letter of Postmaster General Hitch- 
cock transmitting Document No. 105 differed from the letter of the Second Assistant 
Postmaster General in stating that "The committee estimates that througka readjust- 
ment of railway mail pay on the basis of cost with 6 per cent profit a saving to the 
Government could be made of $9,000,000." 

Mr. Stewart then goes on to say in his brief that this $9,000,000 
saving was intended to apply to service on railroads which repre- 
sented 175,922 miles of route out of a total of 220,730 miles, and that 
the same rate of saving applied to all routes would show a total 
saving of $10,531,792. (Hearings, p. 989.) 

It is unnecessary for us to enter into a discussion of the question 
whether Postmaster General Hitchcock misconstrued the language of 
the committee of which his second assistant was chairman. If the 
Postmaster General, with all his supposed knowledge of postal affairs, 
misconstrues the carefully prepared language of a report signed by 
his second assistant in such a manner as to involve a difference of a 
million and a half dollars, what basis is there for the assumption that 
the ordinary citizen can understand what the second assistant means 
by the language he employs ? 

It is also worthy of note that the subject of this $9,000,000 saving 
was discussed with Mr. Stewart at the first hearing conducted by this 
committee, January 28, 1913, and was frequently referred to thereafter, 
but the second assistant made no mention of this discrepancy of a 
million and a half dollars until January 16, 1914, practically a year 
later. Whether the discrepancy was not discovered or whether, 
•having been discovered, it was carefuUy evaded, there is equal demon- 
stration of the necessity for the utmost care in accepting departmental 
•statistics. 

NUMEROUS INCONSISTENCIES DISCLOSED. 

Other vacillations in statistics will now be noted: 

One of the most important factors in the consideration of the cost of 
transportation properly chargeable against the mail service is the 
relative amount of space the mail service uses. The original state- 
ment of the department in Document No. 105 was that the car-foot 
miles of the mail service were 7.179 per cent of the total passenger- train 
ear-foot miles. In the brief filed on January 16, 1913, this percentage 
is changed to 7.09 (Hearings, p. 1008), and on April 3, 1914, the per- 
centage was changed to 7.40 per cent on the basis of the department's 
third plan (Hearings, p. 1498;. 

In a table compiled from statistics in House Document 105 the 
statement was made that the express revenues per car-foot mile 
were 3.865 miUs (Hearings, p. lOOS) ; this was later changed in a state- 
ment under date of March 24, 1914, to 3.56278 mills per car-foot mile 
(Hearings, p. 1279, footnote), and in a letter dated May 28, 1914, it 
was again changed to 3.7745. 

In a hearing before the committee (not printed) the department 
estimated the storage car miles as approximately 38,000,000 per 
annum, but on June 29, 1914, upon the request of our committee, 



EAILWAY MAIL PAY. 115 

reports from field officers were secured and* the estimate changed to 
51,417,527 storage car miles, an increase of 35 per cent in the original 
figures. 

In an unprinted memorandum submitted to the committee, the 
closed-pouch service was estimated as 6,108,075 car miles on a 60- 
foot-car basis, and in a letter of June 29, 1914, this was given as 
164,817,446 service miles without any information as to the relation 
between a service mile and a 60-foot-car mile. 

In an unprinted memorandum submitted to the committee, the 
total railway mail service was estimated at approximately 260,000,000 
car miles on a three-unit plan. Deducting the 38,000,000 of storage 
car miles and 6,108,075 closed-pouch car miles, there would be shown 
to be 216,000,000 car miles for apartment and R. P. O. service. After 
a special tabulation was insisted upon by the joint committee, the 
apartment and R. P. O. mileage on a 60-foot basis was estimated 
to be 205,000,000 car miles, as contrasted with the 216,000,000 
indicated by previous statistics. 

In the brief filed on March 24, 1914, the department made the 
statement that if the mail pay were placed upon the same basis as 
express earnings the compensation would be $46,494,978 under the 
old rates, and $39,055,782 under the new rates established by recent 
order of the Interstate Commerce Commission. (Hearings, p. 1279.) 
The department did not expressly state that it advised placing the 
mail compensation on the same basis as express revenue, but left the 
reader to draw his own inference. After vigorous cross-examination 
at a hearing on April 3, 1914 (pp. 1510-1511, Second Assistant Post- 
master General Stewart stated that he had at no time said that the 
railroads should be paid only what they receive from express com- 
panies for handling express business. It was only by that cross- 
examination that the committee could overcome the inference that 
the department believed that express revenue should be a gauge to 
be used in determining mail compensation. 

Notwithstanding these numerous concrete instances of depart- 
mental vacillation and its lack of comprehension of the essentials of 
successful business operations, we are confronted with the fact 
that the present Postmaster General and his predecessor have each 
furnished an illustration of the greed for additional power innate 
in humanity by advocating Government ownership and operation, 
under the Post Office Department, of the telephone and telegraph 
systems of this country. 

Let us picture the result. Keeping in mind the experience of the 
magazines under the ''blue-tag^' order, discussed on pages 118-119, 
and reasoning a priori, it is fair to assume that some Postmaster Gen- 
eral, under Government ownership of the telegraph and telephone sys- 
tems, would practically assume the right of press censorship, with re- 
sultant individual dictatorial determination as to what news should 
be made public and what suppressed, thus absolutely destroying the 
liberty of the press. 

Government ownership of the telephone and the telegraph systems 
would add 221,000 employees to the present more than 298,000 
postal employees, with the inevitable result of doubling the salaries 
of each of those now in private employ as soon as they enter the 
Government service, with far less efficient and far more costly service 



116 RAILWAY MAIL PAY. 

to the American people, who, after all, pay the bills, whether the 
Government or private enterprise manage and operate the public 
utilities. 

BETTER ACCOUNTING SYSTEM NEEDED. 

In view of the amazing number and incredible character of erro- 
neous statistics supplied to this and previous commissions, we are 
impressed with the idea that the department is in need of the services 
of some man who is a master of the preparation and submission of 
statistics, thus enabling the department to comply with reasonable 
requests Congress may make for data regarding the Postal Service. 

The Post Office Department is one of the largest business enter- 
prises in the world. Attainment of efficiency by adoption of the most 
modern business methods should be one of its fundamental principles. 
It expends now over $300,000,000 per year of the money of the people 
of this country. At the average annual rate of increase for the last 
10 years the Post Office Department will within 20 years receive 
and expend over a billion dollars annually. It is the largest single 
employer and in its operation reaches into more remote sections of 
the country than any other institution. With any reasonable degree 
of effort, the department should be able to give accurate statistics 
regarding the extent of its activities, the cost of the service, and the 
revenue therefrom. The fact is, on the contrary, that the depart- 
ment has not been and is not now so conducted as to be able to do 
this, although, as already shown, repeated attention has been called 
to the defects in the accounting system. 

The necessity of going to outside sourc-s for ultimate verification 
and also the labor of testing the accuracy of departmental statistics 
has very greatly delayed the work of this committee. While it is an 
injury to ths pride of an American citizen to know that the most 
important of our governmental institutions is so utterly lacking in 
knowledge of its own business affairs, as this record has disclosed, we 
believe it is a duty we owe to the country, to Congress, and to our- 
selves to state these facts in order that others may not be misled by 
assuming that departmental statistics are reliable. 

We also feel impelled to suggest that Congress should exercise a 
more direct supervision over this important branch of governmental 
administration to the end that Congress shall not be dependent upon 
the inaccurate and sometimes biased statements of fact submitted 
by the department. 

This expose of the inadequacy of departmental statistics and the 
vacillation and inconsistency of the department is not prompted by 
partisan feeling. The record has been made in the administrations 
of two political parties. The presentation of this record is prompted 
solely by the desire to impress upon Congress and upon the American 
people the need of halting the present tendency to delegate all power 
to an administrative department. 

As a Nation we have been prone to concede the assumed infalli- 
bility of individuals who represent the United States Government. 
We have drifted rapidly and far in the direction of government by 
men rather than government by law. Only by a frank, fearless, and 
complete presentation of facts can we hope to warn of the dangers 
ahead. 



CHAPTER XII. 

DELEGATION OF DISCRETIONARY POWER. 

It will be observed that the bill which this conimittee recommends 
for enactment leaves as little as possible to the discretion of the 
officers of the Post Office Department. We l^elieve this of para- 
mount importance. 

Tne <. onstitution of the United States makes Congress the law- 
making body. Tne people of this countr}^ who established the 
Government and adopted the C onst tution expressed in perfectly 
clear language their desire that ( ongress should make the laws 
under wh ch they were to be governed. Tne exercise of this po\'ver 
is not merely a matter of choice with C ongress, but it is a duty which 
it is required to perform. 

Tne enactment of any law which leaves to an executive depart- 
ment the power to adopt rules and regulations is to that extent a 
delegation of legislative power. We believe, therefore, that in the 
fulfillment of its obligations to the country, it is the duty of ( on- 
gress, so far as practicable, to enact laws in such form that a minimum 
amount of discretionary power shall be vested in administrative 
departments, so that the measure of every man's rights and duties 
and responsibilities will be clearly and definitely stated on the pages 
of our statutes, thus not subjecting any person unnecessarily to the 
whims or prejudices of men who happen to occupy temporary posi- 
tions in the administration of law. 

THE DIVISOR ORDER. 

The present law governing railway mail pay is very general in its 
terms, fixing maximum rates that are to be paid according to average 
daily weights ascertained in 90-day quadrennial weighings. For a 
great many years this statute was interpreted in one manner as t > the 
method of computing the average, but in 1907 the department changed 
its interpretation cf the law with the result of effecting a reduction in 
railway mail pay cf $5,000,000 per annum. 

It is not our purpose to enter into a discussion of the merits of the 
controversy over that much-discussed ^^ divisor order." It is suffi- 
cient to say that in our opinion no statute should remain upon the 
statute books couched in such language as will permit the department 
by a change of interpretation to effect either a reduction or an in- 
crease in the rate of mail compensation. If one administration can 
change its interpretation so as to reduce the compensation of the 
railroads $5,000,000, another administration can change the inter- 
pretation by effecting a corresponding increase. Thus, in effect, the 
department has the power virtually to change the appropriation to 
that extent. 

Although the subtleties of legal argument may successfully estab- 
lish that the exercise of this power is not technically a legislative 

117 



118 RAILWAY MAIL PAY. 

power, the incontrovertible fact remains that the department exer- 
cised authority which changed the compensation $5,000,000 a year. 
We believe the statutes should be so drawn that there can be no 
uncertainty of this kind, and no such latitude for change of statutes 
by interpretation. 

We believe it pertinent and desirable in this connection to direct 
the attention of Congress to the persistent efforts of the Post Office 
Department to secure larger discretionary power which it could use 
in an arbitrary manner. One of the indisputable instances of this 
kind was the suggestion in what is known as the Hitchcock plan, 
submitted to Congress in Document 105, that in fixing rates of com- 
pensation for mail transportation the department should be given 
authority to ascertain the total cost of all railway operation and 
taxes, and make the separation of such cost as between freight and 
passenger train service, and then a secondary separation of the pas- 
senger-service cost as between passengers, express, and mail, the 
cost apportioned to the mail service being the basis for the fixing 
of the rates. 

A more astounding proposal could hardly have been made. If 
given the power to make the apportionment of expenses of freight 
and passenger train services, and then a secondary apportionment 
of the cost as between passengers, express, and mail, the department 
would have power to change the basis of rates to a greater extent 
than was done in the case of the divisor order. By the adoption of 
an arbitrary rule for which it would be accountable to no one, the 
department could change the compensation of the railroads several 
million dollars a year. 

As an illustration of how such discretionary power might be 
exercised, if conferred, we may cite the recommendation of Postmaster 
General Hitchcock that the rates of compensation for mail trans- 
portation be based upon the actual cost of operation and taxes, 
with 6 per cent thereof as a profit. His recommendation made no 
allowance for an adequate return to cover interest on indebtedness 
or return on capital employed. We are not aware of any other au- 
thority occupying a position of trust and responsibility who has ever 
fathered the suggestion that a business enterprise can be successfully 
conducted upon such principles. The very fact that such a recom- 
mendation was made by a Postmaster General and six of his sub- 
ordinates is sufficient evidence that it would be worse than folly to 
delegate large discretionary power to a department likely to be 
conducted by men entertaining such opinions. 

Although advocacy of the Hitchcock plan has been abandoned by 
the department, we make this reference to its fundamental features 
because it illustrates the dangers incident to congressional abdication 
of legislative functions and the delegation of such functions to the 
administrative branch of Government. 

BLUE TAG Om)ER. 

Congress had another very apt illustration of the manner in which 
discretionary power is likely to be exercised, in the famous ''blue 
tag" order of the Post Office Department. Under that order, the 
department caused some periodicals to be removed from the mail 
train service and transported by freight, although rival magazines. 



RAILWAY MAIL PAY. 119 

apparently the same in character and equally interested in prompt 
transportation and dehvery, were continued in the shipments by mail. 
After considerable protest, the department acknowledged its error 
in some of these particulars, and indicated its willingness, when 
the change could be effected, to return such pubhcations to the 
mad, but found difficulty in doing so owing to the fact that a weigh- 
ing had been made while the magazines were removed from the mail, 
and a return of such pubhcations to the mail after the weighing 
would be a manifest injustice to the railroads. The facts in the case, 
however, show that in the exercise of discretion which had not been 
expressly delegated to it by Congress, the department was willing to 
discriminate between pubhcations which were all paying exactly the 
same rate of postage and gave some of them the benefit of mad trans- 
portation while others were compelled to accept such service as could 
be had by freight. The idea that when the same rate of postage is 
paid, different grades of service shall be accorded is something new in 
public service policies. The fact that such pohcies could be deliber- 
ately adopted is, in our opinion, conclusive proof of the undesirabdity 
of expressly delegating unnecessary discretion to the department. 

DISCONTINUANCE OF PARCEL-POST STAMPS. 

As another illustration of the tendency toward assumption of powet 
by an executive department we may cite the instance of the order 
of the Post Office Department discontinuing the use of parcel-post 
stamps, notwithstanding the plain requirement of a statute. When 
the parcel-post problem was under consideration Members of Congress 
became cognizant of the lack of definite statistics regarding the cost 
of handling the different classes of mail or the amount of revenue 
derived therefrom. In order to supply this information for the ben^ 
efit of Congress in the future a provision was inserted in the parcel- 
post law requiring the use of distinctive stamps on fourth-class 
matter. The enforcement of this requirement would give the depart- 
ment reliable information regarding the revenue derived from parcel- 
post business. The adoption of approved methods of accounting 
would enable the department to ascertain approximately the rela- 
tive cost of handling parcel-post matter. This information as to 
both revenue and cost would be of great value to Congress in deter- 
mining what changes in parcel- post rates are justified. Notwith- 
standing the fact that this requirement was contained in the statute 
and the reason therefor was made plain by the report of the Senate 
Post Office Committee recommending the enactment of the parcel- 
post law, the Post Office Department discontinued the use of such 
stamps, thereby removing any possibility of a future ascertainment 
of fourth-class mail revenue upon which any reliance could be placed. 
This action of the department is all the more surprising in view of 
the showing we have made in the previous chapter as to the inade- 
(juacy of data possessed by the Post Office Department regarding 
its other activities. 

AUTOCRATIC POWER SOUGHT. 

That the present administration is no less ardent an advocate of 
delegation of discretionary power to the administrative departments 
than was the previous administration, is indicated by the provisions of 
the tentative bill suggested by the department on February 12, 1914, 



120 RAILWAY MAIL PAY. 

which bill the Postmaster General recommended for enactment. One 
section of this bill may be cited for illustration. It reads as follows : 

The Postmaster General shall from time to time request information from the Inter- 
state Commerce Commission as to the revenue received by railroad companies from 
express companies for services rendered in the transportation of express matter, and 
may, in his discretion, arrange for the transportation of mail matter other than of the 
first class at rates not exceeding those so ascertained and reported to him, and it shall 
be the duty of the railroad companies to carry such mail matter at such rates fixed by 
the Postmaster General. 

A reading of this paragraph shows that the department considers 
itself better fitted than the Interstate Commerce Commission to fix 
transportation rates. That section requires the Interstate Commerce 
Commission to inform the Postmaster General what revenues are 
received by railroad companies for express service, and then author- 
izes the Postmaster General to fix rates for the transportation of mat- 
ter other than first class at not exceeding those so ascertained, and 
makes it the ^^duty of railroad companies to carry such mail matter 
at such r Sites fixed by the Postmaster General.'' 

This provision would apply to matter of the second, third, and 
fourth classes, namely, newspapers, magazines, and other periodicals, 
printed matter, parcel-post matter, and also to free matter. All 
these classes of mail, constituting approximately 90 per cent of the 
total weight of all mail matter, the railroads would be required to 
carry at rates which the Postmaster General could fix as low as he 
pleased, but not exceeding the average express rates. 

No investigation would be required, no hearing need be granted; 
the railroads could have no opportunity for defense, the reasonable- 
ness of rates could not be attacked, there could be no appeal — the 
mere ipse dixit of the Postmaster General would determine the rates 
the railroads should receive for transporting all second, third, and 
fourth class, and free mail matter. 

The greed for power manifested by this recommendation is sur- 
passed only by the concentrated egotism which prompted the belief 
that the department could rightly exercise such power if granted. 

Possessed of the power the Post Office Department has requested 
in the various measures it has proposed and advocated, the Post- 
master General might well exclaim in the language of a famous 
European monarch, ^'The state! I am the state !^' 

BUREAUCRACY GONE MAD. 

Unless confronted by the record of its recommendations, we would 
be loath to believe that any administrative department could presume 
to ask such a delegation of power from an intelligent, self-respecting, 
legislative body imbued with a fair appreciation of its own functions. 

In view of the evidence, which is submitted on pages 111-116 of this 
report, showing the inability of the department to procure and pre- 
sent reliable statistics regarding its own operations, it is difficult to 
conceive how the department could imagine itself competent to make 
an apportionment of expenses between freight and passenger train 
service and among passengers, express, and mail. 

Equally difficult is it to comprehend by what course of reasoning 
the department could bring itself to believe that Congress might enact 
a law which required the railroads to carry mail and then bestowed 
upon the Postmaster General the power to fix the rates. 

Verily, this is bureaucracy gone mad. 



CHAPTER XIII. 

CONCLUSION. 

Briefly summarizing the results of our 19 months' study — 

We are convinced that space should be substituted for weight as 
the basis for railway mail compensation; that the rates should be 
such as will yield a car-mile revenue approximating the car-mile 
revenue derived from passenger service; that legislation on this sub- 
ject should be drawn as specifically and comprehensively as possible, 
and that as little as need be shall be left to the discretion of the Post 
Office Department. 

The record herewith presented fully demonstrates the wisdom of 
Congress in refusing to enact the legislation proposed by the Post 
Office Department in its four suggested plans. 

It is easy to legislate hastily. It requires no deliberation whatever 
for Congress to act blindly upon the ill-considered recommendations 
of a department or bureau head. Tnis entire subject could have 
been disposed of in 1912 by the prompt enactment of the bill pro- 
posed by Postmaster General Hitchcock, or in 1913 by enactment 
of the modified Hitchcock plan, or early in 1914 by enactment of the 
first Burleson plan. Tne enactment of any of these now abandoned 
plans would have satisfied misguided clamor for immediate action. 
But Congress would have forfeited its own self-respect and the 
respect of the American people upon discovery that it had acted 
unwisely and that an unjust, unscientific, and impractical plan had 
been adopted. 

We believe it better for Congress to bear the unjust criticisms of 
those who are misled by hasty advisers than to place upon the statute 
books laws which will be demonstrated by experience to be un- 
worthy the approval of men charged with the sacred trust of legis- 
lating intelligentl}^ for all the people of the United States. 

It has been our view that it is not our duty to endeavor to make 
out a case that is favorable or unfavorable to either the Government 
or the railroads, but to ascertain with as great accuracy as possible 
what is a reasonable compensation to be paid. We believe that the 
Government should deal justly with its citizens, for if it expects them 
to deal justly with one another and with the Government, the Gov- 
ernment must set the example by dealing justly with them. 

We are aware that it is popular to denounce and attack the rail- 
loads and that it would be pleasing to the taxpayer if the expenditure 
for railway mail compensation could equitably be reduced. We do 
not believe, however, that the American people desire the mails car- 
ried by the railroads or by anyone else for less than a reasonable com- 
pensation therefor. We have endeavored to ascertain what are rea- 
sonable charges. We recommend that such charges be paid. To 
what extent the rates we suggest will increase the total amount of 

121 



122 RAILWAY MAIL PAY. 

compensation is largely problematical for the reason that it can not 
■be known in advance exactly what space the Post Office Department 
will authorize for the transportation of mail. We firmly believe, 
however, on the showing made in the Lorenz table, submitted on 
page 19, Chapter I, of this report, that the enactment and operation 
of our suggested bill will not result in increased postal expenditures 
of more than $3,000,000 over the actual appropriations carried in the 
last Post Office appropriation bill for railway-mail pay, including 
inland transportation by railroads, postal pay for freight or expressage, 
and railway post-office car service. 

That there should be an increase in railway-mail pay need not be 
surprising; in fact, it must be expected. The volume of postal 
revenue increased at the average rate of about 7 per cent per annum, 
or an average of about $13,000,000 a year during the 10-year period 
from 1903 to 1913. This necessarily means a corresponding increase 
in the volume of mail. No reasonable man can expect that the 
Government can increase its postal revenues at an average rate of 
$13,000,000 per year without increasing its expenses in practically 
all departments of the service, though perhaps at a smaller ratio. In 
this connection it is pertinent to remark that although the postal 
revenues doubled in that 10-year period railway-mail compensation 
increased only 20 per cent. 

We submit as an appendix herewith an itemized statement of ex- 
penditures of the committee aggregating $6,560.50 up to August 1, 
1914. On August 24, 1912, Congress appropriated the sum of $25,000 
for the use of our committee. We have on hand a balance, therefore, 
of $18,439.50 still available out of which to defray such additional 
expense as may be incurred in working out a plan for mail pay to 
electric roads and in conducting the study of postage on second-class 
mail matter. The itemized statement will be found on pages 123 
and 124. 

The expenditures of this commission contain no items of expense 
on account of the members themselves. As heretofore explained, 
two members of the commission, the chairman, Hon. Jonathan 
Bourne, jr., and Hon. Harry A. Richardson, ceased to be members 
of the Senate on March 4, 1913. In pursuance of the act of Congress 
continuing the personnel of the commission, they have continued 
to serve without compensation and have paid their own expenses. 

The expenditures above mentioned do not cover printing, which, 
under general laws, is paid for out of the general printing appropria- 
tion bills. 



APPENDIX. 

Financial statement of the Joint Committee on Postage on Second-Class Mail Matter 
and Compensation for the Transportation of Mail. 

APPROPRIATION. 

By special act of Congress, Aug. 24, 1912 $25, 000. Oa 

DISBURSEMENTS. 

Salary secretary (Robert H. Turner), July 10, 1913-Aug. 1, 

1914, 12 months and 21 days |2, 540. 00 

Salary stenographer (F. E. Ramsay), Apr. 7-July 15, 1913 330. 00 

Salary stenographer (Janie M. George) : 

Aug. 25-Sept. 25, 1913 $100,00 

Nov. 1-15, 1913 26. 00 

May 21-June 29, 1914 136. 00 

July 1-31, 1914 104. 00 

366. 00 

Salary, clerical (Thomas L. Lloyd), Mar. 10-May 10, 1914, 2 

months 250. 00 

Salary statistician (M. 0. Lorenz): 

July 28-July 31 , 1913 $30. 00 

Aug. 1-Sept. 30, 1913 600.00 

630. 00 

Extra help, clerical, Apr. 1, 1913-June 25, 1914 220. 00 

Official stenographer for hearings (Warren M. Mitchell): 

Jan. 28-Feb. 17, 1913 $493.35 

Mar. 27-Apr. 22, 1913 547. 50 

Sept. 22, 1913 150.15 

Jan. 20-Feb. 3, 1914 329.05 

Feb. 26, 1914 56.00 

Mar. 16-Apr. 3, 1914 577. 85 

2,153.90 

Traveling expenses: 

R. H. Turner to New York, Aug. 15-16, 1913 18. 38 

M. O. Lorenz to New York, Aug. 15-16, 1913 .... 18. 24 

36. 62 

Office supplies, Apr. 16, 1913-July 31, 1914 29. 94 

Telegrams and telephones: 

Telephone $2. 45 

Telegrams 1. 59 

4.04 

6, 560. 5a 

Balance in treasury July 81, 1914 $18, 439. 5a 

123 



124 APPENDIX. 

LIST OP VOUCHERS IN ORDER OF ISSUANCE. /^ 
1913. 

Jan. 28-Feb. 17, stenographic services reporting hearings, Warren M. Mitchell $493. 35 

Mar, 27-Apr. 22, stenographic services reporting hearings, Warren M, Mitchell 547. 50 

Mar. 26, telephone, Mrs, H. G. Daley 2, 45 

Mar, 15-Apr. 1, clerical, Miss Blanch Austin 25. 00 

Apr. 1-Apr. 15, clerical, Miss Blanch Austin 32. 50 

Apr. 15-May 1, clerical. Miss Blanch Austin 25. 00 

Apr. 7-May 1, stenographic services, Mrs. F. E, Bamsay 80. 00 

May 1-May 16, stenographic services, F. E. Ramsay 50. 00 

May 16-May 31, stenographic services, F. E. Ramsay 50. 00 

June 1-June 30, stenographic services, F. E . Ramsay 100. 00 

July 1-July 15, stenographic services, F, E. Ramsay 50. 00 

July 10-July 31, services as secretary to the joint committee, Robert H. 

Turner 140. 00 

Aug. 6-Aug. 12, clerical services, Mr, J. J. H, Poole 25. 00 

Aug, 1-Aug, 31, services as secretary, Robert H, Turner 200. 00 

July 28-July 31, statistician, Mr. M. 0. Lorenz.. 30. 00 

Aug. 1-Aug. 31, statistician, Mr. M. 0. Lorenz 300, 00 

Sept, 22, stenographic services reporting hearings, Warren M, Mitchell 150. 15 

Aug. 25-Sept. 24, stenographic services. Miss J. M. George 100. 00 

Sept. 1-Sept. 30, statistician, M. O. Lorenz 300. 00 

Sept. 1-Sept. 30, services as secretary, Robert H. Turner 200. 00 

Oct, 1-Oct. 31, services as secretary, Robert H. Turner 200, 00 

Aug, 15-16, traveling expenses, Robert H. Turner to New York 18, 38 

Aug, 15-16, traveling expenses, M, 0, Lorenz to New York 18. 24 

Nov. 1-Nov. 30, services as secretary, Robert H, Turner 200, 03 

Nov. 1-Nov. 15, stenographic services, Janie M. George 26, 00 

Apr, 16-Dec, 4, stationery, Charles N, Richards 7, 90 

Dec. 1-Dec. 31, services as secretary, Robert H. Turner : 200, 00 

1914, 

Jan. 20-Feb. 3, stenographic services reporting hearings, Warren M. Mitchell 329. 05 

Dec. 27, 1913-Feb, 27, stationery, Charles N. Richards 6. 10 

Jan. 1-Jan, 31, services as secretary, Robert H. Turner 200, 00 

Feb, 1-Feb. 28, services as secretary, Robert H, Turner 200, 00 

Feb. 19 and Mar, 7, Western Union ($0.71 and $0,48) 1. 19 

Feb. 26, stenographic services reporting hearings, Warren M. Mitchell 56. 00 

Mar. 1-Mar. 31, services as secretary, Robert H. Turner 200. 00 

Mar, 10-Apr. 10, clerical services, Thomas J. Lloyd 125, 00 

Mar, 16-Apr, 3, stenographic services reporting hearings, Warren M. Mitchell 577. 85 

Mar, 14-June 5, stationery, Charles N. Richards 5. 85 

Apr, 1-Apr, 30, services as secretary, Robert H. Turner 200. 00 

Apr, 10-May 10, clerical services, Thomas J. Lloyd. 125. 00 

May 1-May 31, services as secretary, Robert H, Turner 200. 00 

May 21-May 23, statistical service, A. C. Devoe 8. 50 

May 21-June 13, stenographic service, Janie M. George 80. 00 

May 22-May 29, clerical service, I. C. Racoosin 28. 00 

May 22-May 27, clerical service, James H. Irwin 17. 50 

May 23-May 27, clerical service, Margaret P. Wilson 14. 00 

May 25-May 27, clerical service, Elizabeth B . Burt 10. 50 

June 2, Western Union, telegram -40 

June 1-June 30, services as secretary, Robert H. Turner. 200. 00 

June 9- June 16, clerical service, I. C . Racoosin 24. 00 

June 15- June 30, stenographic service, Janie M, George 56. 00 

July 1-July 31, stenographic service, Janie M. George 1 04. 00 

July 1-July 31, services as secretary, Robert H. Turner 200. 00 

July 18, stationery, R. P. Andrews Paper Co 2. 80 

July 8-July 31, stationery, Charles N . Richards 7. 26 

July 31, clerical service, Virginia Early 10. 00 

July 31, 1914 i $6,560.50 

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